IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v18y2025i7p369-d1693075.html
   My bibliography  Save this article

From Optimism to Recalibration: The Temporal Dynamics of Market Reactions to Women’s Board Appointments in Saudi Arabia

Author

Listed:
  • Ezer Ayadi

    (Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia)

  • Noura Ben Mbarek

    (Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia)

  • Ines Chaabouni

    (Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia)

Abstract

This study examines stock market reactions to female board appointments among 34 publicly listed companies in Saudi Arabia between 2021 and 2024. We employ a multi-method approach covering 36 announcements. Our primary methodology is an event study, which we complement with two distinct robustness checks: the Local Projections (LP) method to capture the evolving nature of market responses and the Quantile-on-Quantile analysis to investigate how market conditions interact with the three phases surrounding the event—the anticipation period before the appointment, the appointment event itself, and the post-appointment adjustment period. This comprehensive methodological framework allows us to capture the immediate market response to appointment announcements and the longer-term implications for firm performance while accounting for various econometric challenges inherent in financial market data. Our findings reveal a negative market reaction that gradually intensifies, becoming marginally significant by the tenth trading day. This pattern suggests that investors in the Saudi market may initially view female board appointments with skepticism, potentially reflecting uncertainty about the impact of gender diversity in a traditionally male-dominated business environment. Furthermore, the evolution from 2021 to 2024 suggests a market that is progressively developing more sophisticated frameworks for evaluating female board appointments. Rather than exhibiting a monotonic trend toward either increasingly positive or negative reactions, the market appears to be engaging in a learning process characterized by periodic reassessments. Moreover, our results indicate that while the immediate event and anticipation phases yield mixed impacts across the return distribution, the adjustment period exhibits a robust and significantly negative interaction with market returns. These findings suggest that market overreactions, particularly during bullish periods, contribute to a pronounced correction effect following female board appointments.

Suggested Citation

  • Ezer Ayadi & Noura Ben Mbarek & Ines Chaabouni, 2025. "From Optimism to Recalibration: The Temporal Dynamics of Market Reactions to Women’s Board Appointments in Saudi Arabia," JRFM, MDPI, vol. 18(7), pages 1-42, July.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:7:p:369-:d:1693075
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/18/7/369/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/18/7/369/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David K. Ding & Echo Su Chen, 2018. "The market impact of the appointment of female directors in listed companies in New Zealand," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 4(5), pages 247-257.
    2. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    3. Ezer Ayadi & Noura Ben Mbarek, 2025. "The Dynamic Effects of Economic Uncertainties and Geopolitical Risks on Saudi Stock Market Returns: Evidence from Local Projections," JRFM, MDPI, vol. 18(5), pages 1-35, May.
    4. Shamsul N. Abdullah & Ku Nor Izah Ku Ismail & Lilac Nachum, 2016. "Does having women on boards create value? The impact of societal perceptions and corporate governance in emerging markets," Strategic Management Journal, Wiley Blackwell, vol. 37(3), pages 466-476, March.
    5. Jiatao Li & J. Richard Harrison, 2008. "National Culture and the Composition and Leadership Structure of Boards of Directors," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 375-385, September.
    6. Peggy M. Lee & Erika Hayes James, 2007. "She'‐e‐os: gender effects and investor reactions to the announcements of top executive appointments," Strategic Management Journal, Wiley Blackwell, vol. 28(3), pages 227-241, March.
    7. Kenneth R. Ahern & Amy K. Dittmar, 2012. "The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 137-197.
    8. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    9. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    10. Lauren Cohen & Andrea Frazzini, 2008. "Economic Links and Predictable Returns," Journal of Finance, American Finance Association, vol. 63(4), pages 1977-2011, August.
    11. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    12. Syed Shafqat Mukarram & Abubakr Saeed & Shawkat Hammoudeh & Muhammad Mustafa Raziq, 2018. "Women on Indian boards and market performance: a role-congruity theory perspective," Asian Business & Management, Palgrave Macmillan, vol. 17(1), pages 4-36, February.
    13. Huang, Wendi, 2024. "Female board representation and firm value: International evidence," Finance Research Letters, Elsevier, vol. 68(C).
    14. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bayly, Nicholas & Breunig, Robert & Wokker, Chris, 2023. "Female Board Representation and Corporate Performance: A Review and New Estimates for Australia," IZA Discussion Papers 16617, Institute of Labor Economics (IZA).
    2. Syed Shafqat Mukarram & Abubakr Saeed & Shawkat Hammoudeh & Muhammad Mustafa Raziq, 2018. "Women on Indian boards and market performance: a role-congruity theory perspective," Asian Business & Management, Palgrave Macmillan, vol. 17(1), pages 4-36, February.
    3. Ding, Li & Lam, Hugo K.S. & Cheng, T.C.E. & Zhou, Honggeng, 2021. "The contagion and competitive effects across national borders: Evidence from the 2016 Kumamoto earthquakes," International Journal of Production Economics, Elsevier, vol. 235(C).
    4. Carlo Rosa & Giovanni Verga, 2006. "The Impact of Central Bank Announcements on Asset Prices in Real Time: Testing the Efficiency of the Euribor Futures Market," CEP Discussion Papers dp0764, Centre for Economic Performance, LSE.
    5. Monica Martinez-Blasco & Vanessa Serrano & Francesc Prior & Jordi Cuadros, 2023. "Analysis of an event study using the Fama–French five-factor model: teaching approaches including spreadsheets and the R programming language," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-34, December.
    6. Xing, Lu & Gonzalez, Angelica & Sila, Vathunyoo, 2021. "Does cooperation among women enhance or impede firm performance?," The British Accounting Review, Elsevier, vol. 53(4).
    7. Upadhyay, Arun, 2023. "Rising board gender diversity and incentives of female directors," Journal of Corporate Finance, Elsevier, vol. 80(C).
    8. Katia Furlotti & Tatiana Mazza & Veronica Tibiletti & Silvia Triani, 2019. "Women in top positions on boards of directors: Gender policies disclosed in Italian sustainability reporting," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(1), pages 57-70, January.
    9. Sanae Ait Jillali & Mohammed Belkasseh, 2023. "IPOs performance evaluation: Which methodology to opt for?," Post-Print halshs-04322482, HAL.
    10. Xu, Mingli & Yang, Wei & Huang, Zhixiong, 2021. "Do investor relations matter in the tourism industry? Evidence from public opinions in China," Economic Modelling, Elsevier, vol. 94(C), pages 923-933.
    11. Michael Buchner & Tobias A. Jopp, 2019. "Full steam ahead: Insider knowledge, stock trading and the nationalization of the railways in Prussia around 1879," Working Papers 0151, European Historical Economics Society (EHES).
    12. Furdui Călin & Șfabu Dorina Teodora, 2023. "The European Banks Under the Shock of the Russian Invasion of 2022: An Event Study Approach," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 68(1), pages 62-77, April.
    13. Rommel, J. & Neuenfeldt, S. & Odening, M., 2010. "Markteffekte medienwirksamer Lebensmittelskandale – eine Ergebnisstudie," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45, March.
    14. Bryan Fong, 2021. "Analysing the behavioural finance impact of 'fake news' phenomena on financial markets: a representative agent model and empirical validation," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-30, December.
    15. Chiara Pronzato & Paola Profeta & Valeria Ferraro & Giulia Ferrari, 2016. "Gender Quotas: Challenging the Boards, Performance, and the Stock Market," Working Papers id:11411, eSocialSciences.
    16. Tanaka, Takanori, 2019. "Gender diversity on Japanese corporate boards," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 19-31.
    17. Neji Al-Eid Omri & Abdulhameed Mohanna Alfaleh, 2024. "The effects of boardroom gender diversity on corporate performance: empirical evidence from a sample of European listed companies," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(2), pages 86-100, April.
    18. Ahmad H. Juma’h & Yazan Alnsour, 2018. "Using Social Media Analytics: The Effect of President Trump’s Tweets On Companies’ Performance," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 17(1), pages 100-121, March.
    19. Dora Almeida & Andreia Dionísio & Muhammad Enamul Haque & Paulo Ferreira, 2022. "A Giant Falls: The Impact of Evergrande on Asian Stock Indexes," JRFM, MDPI, vol. 15(8), pages 1-14, July.
    20. Nicolau, Juan Luis & Sharma, Abhinav, 2022. "A review of research into drivers of firm value through event studies in tourism and hospitality: Launching the Annals of Tourism Research curated collection on drivers of firm value through event stu," Annals of Tourism Research, Elsevier, vol. 95(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:18:y:2025:i:7:p:369-:d:1693075. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.