Board diversity and the timing of drug recalls: Implications for public health and shareholder value

Minjae Kim and Ki Bum Noh

Finance Research Letters, 2025, vol. 80, issue C

Abstract: This study examines the influence of board diversity on firms’ strategic decision-making and shareholder value, analyzing pharmaceutical companies’ responses to adverse event reports. Employing duration analysis, we find that firms with higher proportions of foreign and female directors on their boards are significantly more likely to issue prompt recalls following adverse event reports. Additionally, our results demonstrate that delayed recalls by firms with less diverse boards lead to substantial negative stock returns. These findings underscore the importance of board diversity in enhancing public health protection and reducing financial risk.

Keywords: Board diversity; Product recall; Recall timing; Public health risk; Shareholder value (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006476

DOI: 10.1016/j.frl.2025.107387

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