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

Ezer Ayadi (), Noura Ben Mbarek and Ines Chaabouni
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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

JRFM, 2025, vol. 18, issue 7, 1-42

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.

Keywords: board diversity; gender; corporate governance; event study; local projections; quantile analysis; market reaction; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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