Shhh... Do Gender Diverse Boards Prioritize Product Market Concerns over Capital Market Incentives? An Ethical Dilemma

45 Pages Posted: 15 Oct 2022

See all articles by Dharmendra Naidu

Dharmendra Naidu

Monash University - Department of Accounting

Kumari Ranjeeni

Transitional Artificial Intelligence Research Group

Date Written: September 29, 2022

Abstract

We examine whether gender diverse boards prioritize product market concerns over capital market incentives when proprietary cost is high. Using a matched sample of the United States (US) listed companies and difference-in-differences research designs, we find that firms with gender diverse board experience higher adverse selection cost relative to similar firms with all-male board when the firm faces high competition or redacts disclosure of proprietary information from its material contract filings. Collectively, our results suggest that when proprietary cost is high, gender diverse boards strategically prioritize product market concerns by refraining from disclosure of proprietary information, relative to an all-male board, to protect shareholder interests and reduce risk exposure from loss of proprietary information to competitors.

Keywords: Board gender diversity; Proprietary cost; Product market competition; Confidential treatment orders; Adverse Selection.

JEL Classification: D23; G12; G14; G34; M14.

Suggested Citation

Naidu, Dharmendra and Ranjeeni, Kumari, Shhh... Do Gender Diverse Boards Prioritize Product Market Concerns over Capital Market Incentives? An Ethical Dilemma (September 29, 2022). Available at SSRN: https://ssrn.com/abstract=4232959 or http://dx.doi.org/10.2139/ssrn.4232959

Dharmendra Naidu

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

Kumari Ranjeeni (Contact Author)

Transitional Artificial Intelligence Research Group ( email )

Sydney
Sydney
Sydney
Australia

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