Gender bias, board diversity, and firm value: Evidence from a natural experiment

Edward R. Lawrence and Mehul Raithatha

Journal of Corporate Finance, 2023, vol. 78, issue C

Abstract: We study the impact of gender diversity in corporate boards on firm value by exploiting a natural experiment setting in India where the government mandated firms to appoint at least one female director on their boards. We find a significantly positive market reaction when firms comply with the mandate but only when they appoint qualified female directors who are not related to promoters. Moreover, market reward is higher for firms headquartered in states with severe gender bias. We show how regulatory intervention mitigates frictions related to gender bias to improve firm value through greater gender diversity when firms respond appropriately.

Keywords: Board of directors; Female directors; Gender diversity; Window dressing; Gender bias; Gender quotas (search for similar items in EconPapers)
JEL-codes: G1 G14 G18 J7 J71 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:78:y:2023:i:c:s0929119922001924

DOI: 10.1016/j.jcorpfin.2022.102349

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