Female board appointments and firm valuation: short and long-term effects

Citation

Campbell K & Vera AM (2010) Female board appointments and firm valuation: short and long-term effects. Journal of Management and Governance, 14 (1), pp. 37-59. https://doi.org/10.1007/s10997-009-9092-y

Abstract
The presence of women on boards of directors has become a high profileissue in recent years. Several studies, based largely on data from countries withAnglo-Saxon corporate governance systems, have investigated the influence offemale board appointments on firm performance. This study focuses on the impactof female directors in Spain, where debate about this topic has been intense for tworeasons: the recommendation in 2006 by Spain's Unified Good Governance Code ofpositive discrimination in favour of female board appointments and the passing in2007 of a Gender Equality Act by the Spanish parliament. Our paper analyses theshort and long term effect of the appointment of female directors prior to theseevents. We use an event study to analyze the short term stock market reaction to theappointment of female directors and a multiple regression approach, using thesystem GMM estimation procedure, to assess the long term influence on firm valueof female boardroom appointments. We find that the stock market reacts positivelyin the short term to the announcement of female board appointments, suggestingthat investors on average believe that female directors add value. This belief appearsto be confirmed by our regression results which show that female board appointmentsare positively associated with firm value over a sustained period. Theseresults suggest that the legislative changes in Spain make economic sense as well asadvancing the cause of women in Spanish boardrooms.

Keywords
Women; Board of directors; Market reaction; G30; G34; G38

Journal
Journal of Management and Governance: Volume 14, Issue 1