In our paper, Does Gender Matter in the Boardroom? Evidence from the Market Reaction to Mandatory New Director Announcements, we examine how the market perceives the appointment of female directors on average as well as how the market perceives their appointment relative to men. Many countries are introducing initiatives to promote boardroom gender diversity. Since the benefits and costs of boardroom diversity quotas in publicly-traded companies are ultimately borne by shareholders, it is important to examine how they react to increases in gender diversity. If the market reacts systematically differently to female appointments, this suggests that gender may matter above and beyond other director characteristics.

To date there is almost no evidence that the market reacts to female director appointments. One problem with conducting an event study of director appointments is that formal elections take place at the annual meeting and the announcement of the new director appointment often appears in the proxy statement or annual report. Because of the amount of information released around the annual meeting, it is difficult to attribute the stock price reaction around proxy or annual meeting dates to new director appointments. On the other hand, results based on director appointment announcements that appear in press releases or newspaper articles prior to proxy dates may be biased due to sample selection and strategic timing of press releases, as Rosenstein and Wyatt (1990) suggest. If companies time announcements depending on their expectation of the market’s reaction, abnormal returns around event dates may be systematically biased. This may be a particularly serious problem for event studies trying to identify gender effects since female directors are generally in the minority and their appointments may attract more attention than the appointment of male directors. Another problem is that if the appointment of female directors is anticipated, it will be difficult to detect the market reaction on the event date.

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