TY - JOUR
T1 - Female Directors and Firm Value
T2 - New Evidence from Directors' Deaths
AU - Schmid, Thomas
AU - Urban, Daniel
N1 - Publisher Copyright:
Copyright: © 2022 INFORMS.
PY - 2023/4
Y1 - 2023/4
N2 - This paper examines how female directors (FDs) affect firm value in the absence of mandatory gender quotas. Using a newly collected data set on director deaths around the globe, we find that stock prices decrease approximately 2% more when an FD passes away, compared with a male director. What explains this negative capital market reaction? We find evidence that finding successors for deceased FDs is challenging for firms: Succession delays are longer, and although firms try to replace FDs with women, two-thirds of their successors are male. Furthermore, their successors tend to be younger, less experienced, and more often externally hired. Stock prices decline less if more potential female successors exist in a country, the firm is larger, or FDs other than the deceased woman were on the board. Because observable characteristics such as age, tenure, education, and network centrality cannot explain the negative stock market reaction, unobserved differences across genders that lead to a lower fit of male successors to the existing board are the most likely explanation for the firm value loss after the death of an FD.
AB - This paper examines how female directors (FDs) affect firm value in the absence of mandatory gender quotas. Using a newly collected data set on director deaths around the globe, we find that stock prices decrease approximately 2% more when an FD passes away, compared with a male director. What explains this negative capital market reaction? We find evidence that finding successors for deceased FDs is challenging for firms: Succession delays are longer, and although firms try to replace FDs with women, two-thirds of their successors are male. Furthermore, their successors tend to be younger, less experienced, and more often externally hired. Stock prices decline less if more potential female successors exist in a country, the firm is larger, or FDs other than the deceased woman were on the board. Because observable characteristics such as age, tenure, education, and network centrality cannot explain the negative stock market reaction, unobserved differences across genders that lead to a lower fit of male successors to the existing board are the most likely explanation for the firm value loss after the death of an FD.
UR - https://www.webofscience.com/api/gateway?GWVersion=2&SrcApp=eur_pure&SrcAuth=WosAPI&KeyUT=WOS:000827141800001&DestLinkType=FullRecord&DestApp=WOS
UR - http://www.scopus.com/inward/record.url?scp=85156137214&partnerID=8YFLogxK
U2 - 10.1287/mnsc.2022.4412
DO - 10.1287/mnsc.2022.4412
M3 - Article
SN - 0025-1909
VL - 69
SP - 2449
EP - 2473
JO - Management Science
JF - Management Science
IS - 4
ER -