The effect of gender on stock price reaction to the appointment of directors: the case of the FTSE 100

Abstract

We examine the effect of the appointment of directors on the share price of FTSE companies. We find that the share price reaction to the appointment of directors suggests that gender is not an issue in the appointment of nonexecutive directors, but it does have an effect on the market reaction to the appointment of executive directors.

Keywords:

• FTSE 100
• gender
• directors
• event study

JEL Classification:

• G14
• G30
• J16

Notes

¹This resulted in us dropping 9 companies.

²There were only three such observations.

³This variable also largely captures the distinction between independent and nonindependent directors, although it does not capture those who, though not formerly employed by the company, are not classed as independent as a result of family ties or cross directorships (see UK Corporate Governance Code (2010) Principle B.1.1). The inclusion of two variables, the first reflecting independence, the second reflecting insider status, was deemed undesirable as a result of the high degree of correlation between the two.

⁴Both the standardized market value and the standardized PE ratio for each observation were calculated using the market capitalization and PE ratios of the particular company in question, and of the market, on the date of the announcement.