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Women are from Venus, Men are from Mars: But Do the Financial Markets Know It?

Amelie Charles and Etienne Redor ()
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Etienne Redor: Audencia, School of Management

Economics Bulletin, 2014, vol. 34, issue 1, 589-604

Abstract: Although existing research has documented in very wide and detailed terms the impact of the presence of female directors on the financial performance of firms, very little is known about the link between board composition and corporate risk-taking. Drawing from the academic literature demonstrating that women are more risk averse than men, herein, we analyze the relationship between gender diversity and firm risk. In particular, we study whether the appointment of female directors affects firm risk level. We use three different measures of risk (total risk, systematic risk, and unsystematic risk) and compare firm risk level before the addition of new members (both male and female) to the corporate board to the risk level after such additions. Our results indicate that there is no significant gender difference in the risk level before and after the appointment of a director, when the whole sample is considered. However, some differences appear when the analysis is conducted by industry. Similarly, we show that the appointment of a female director has a greater impact on firm risk in female-director-friendly firm.

Keywords: Board Composition; Directors; Gender; Total Risk; Systematic Risk; Unsystematic Risk. (search for similar items in EconPapers)
JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2014-03-31
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