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Does board gender diversity improve the informativeness of stock prices?

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  • Gul, Ferdinand A.
  • Srinidhi, Bin
  • Ng, Anthony C.

Abstract

We show that stock prices of firms with gender-diverse boards reflect more firm-specific information after controlling for corporate governance, earnings quality, institutional ownership and acquisition activity. Further, we show that the relationship is stronger for firms with weak corporate governance suggesting that gender-diverse boards could act as a substitute mechanism for corporate governance that would be otherwise weak. The results are robust to alternative specifications of informativeness and gender diversity and to sensitivity tests controlling for time-invariant firm characteristics and alternative measures of stock price informativeness. We also find that gender diversity improves stock price informativeness through the mechanism of increased public disclosure in large firms and by encouraging private information collection in small firms.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Accounting and Economics.

Volume (Year): 51 (2011)
Issue (Month): 3 (April)
Pages: 314-338

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Handle: RePEc:eee:jaecon:v:51:y:2011:i:3:p:314-338

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Web page: http://www.elsevier.com/locate/jae

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Keywords: Idiosyncratic volatility Female director Diversity Earnings quality Governance Transparency;

References

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  1. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance And Equity Prices," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 107-155, February.
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Citations

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Cited by:
  1. Min, Byung-Seong, 2013. "Evaluation of board reforms: An examination of the appointment of outside directors," Journal of the Japanese and International Economies, Elsevier, vol. 29(C), pages 21-43.
  2. Mehdi Nekhili & Hayette Gatfaoui, 2013. "Are Demographic Attributes and Firm Characteristics Drivers of Gender Diversity? Investigating Women’s Positions on French Boards of Directors," Journal of Business Ethics, Springer, vol. 118(2), pages 227-249, December.
  3. Lam, Kevin C.K. & McGuinness, Paul B. & Vieito, João Paulo, 2013. "CEO gender, executive compensation and firm performance in Chinese‐listed enterprises," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 1136-1159.
  4. Sander Hoogendoorn & Hessel Oosterbeek & Mirjam van Praag, 2011. "The Impact of Gender Diversity on the Performance of Business Teams: Evidence from a Field Experiment," Tinbergen Institute Discussion Papers 11-074/3, Tinbergen Institute, revised 01 May 2014.
  5. Sun, Jerry & Liu, Guoping, 2014. "Audit committees’ oversight of bank risk-taking," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 376-387.
  6. Pathan, Shams & Faff, Robert, 2013. "Does board structure in banks really affect their performance?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1573-1589.
  7. Francis, Bill & Hasan, Iftekhar & Park, Jong Chool & Wu, Qiang, 2014. "Gender differences in financial reporting decision-making: Evidence from accounting conservatism," Research Discussion Papers 1/2014, Bank of Finland.
  8. Fang, Yiwei & Francis , Bill & Hasan, Iftekhar, 2012. "More than connectedness – Heterogeneity of CEO social network and firm value," Research Discussion Papers 26/2012, Bank of Finland.
  9. Dalilawati Zainal & Norhayah Zulkifli & Zakiah Saleh, 2013. "Corporate Board Diversity in Malaysia: A Longitudinal Analysis of Gender and Nationality Diversity," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 136-148, January.

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