Discrimination in the Stock Market: Board Gender and Stock Performance

In this paper, we use event studies to estimate the effects of changes to a public firm's board of trustees on stock returns. The goal is to determine whether the gender of an incoming board member is perceived differently by investors. Scholarly findings on gender and leadership have been mixed at best. Overall, the evidence seems to indicate that women and men in comparable leadership positions are much more alike than different. Yet, the number of women in leadership positions in the United States (and globally) is still disproportionately low-a phenomenon known as the "glass ceiling." Our study shows that women and men, at least in the United States, are still not created equal in the eyes of investors. Using BoardEx data on the composition of U.S. public firm boards for 1992-2017, we find that changes to a firm's board are consistently perceived as a negative information shock by investors, but the effect of incoming female board members is more than twice as negative as than of male counterparts.