The IUP Journal of Corporate Governance
Market Reaction to Appointment of Women on the Board of Directors: An Event Study on Indian Companies

Article Details
Pub. Date : July, 2023
Product Name : The IUP Journal of Corporate Governance
Product Type : Article
Product Code : IJCG030723
Author Name : Amitabh Gupta and Faeezah Peerbhai
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 17



The study examines the stock market reaction to the appointment of women to the Board of Directors of companies in India. The sample comprises 68 such appointments by 68 companies from 2014 to 2021. Standard event study methodology was used to determine the market reaction to the appointment of women directors. The event study used a 41-day event window (20 days prior to the date of appointment and 20 days post appointment) and an estimation period of 180 days. The study found evidence of a positive, statistically significant return post announcement, which suggests that the Indian stock market reacts favorably to the appointment of female directors. The findings have implications for policymakers that support gender diversity.


Board diversity is a topic that has attracted an increased amount of academic interest in recent years. Historically, men have occupied most of the workplace, and thus dominated executive management posts as well as the Board of Directors. However, the turn of the century has seen a considerably increased representation of women in top corporate positions. The Resource Dependence Theory (RDT) suggests that the inclusion of females on the board of directors results in a greater diversity of skillsets and resources than having an all-male board, and this leads to greater profitability in the firm. Studies have found that women can improve the ability of boards to manage their strategic roles, as women are more patient (Amran et al., 2014), more honest (Swamy et al., 2001), more risk-averse, and possess greater multi-tasking skills as well as higher educational levels (Moreno-Gomez et al., 2018). As such, literature shows that the inclusion of women on the board has led to a greater scrutiny of management decisions (Selby, 2000), increased firm performance, lower related party transactions, improved firm value and improved corporate governance. Abad et al. (2017) found that inclusion of independent women directors may contribute to better monitoring of agents (top management), and thus greater potential to maximize shareholders' interest. Earlier studies from the United Kingdom (UK) and