📖 Daily Journal | Rising board gender diversity and incentives of female directors

✍🏻️ Author: Arun Upadhyay

📖 Source: Journal of Corporate Finance, Volume 80, June 2023

Introduction

The article explores the motivations and behaviors of female independent directors in corporate finance and the impact of their primary profession on board dynamics and corporate outcomes. The study finds that female directors play a crucial role in shaping corporate governance and performance. The research also examines the impact of female directors on M&A announcement returns and takeover premiums.

Discussion

Addressing the Problem: The article addresses the problem of the lack of understanding of the motivations and behaviors of female independent directors in corporate finance. The study aims to fill this gap by examining the impact of their primary profession on board dynamics and corporate outcomes. The research also addresses the need to understand the impact of female directors on M&A announcement returns and takeover premiums.

Methodology: The study uses a sample of M&A transactions from 1990 to 2019 and examines the characteristics of the deals, acquirers, and targets. The research also analyzes the impact of female directors on M&A announcement returns and takeover premiums. The study uses regression analysis to examine the impact of female directors on corporate outcomes.

Findings: The study finds that female directors from non-executive backgrounds are more likely to focus on accumulating board seats as compared to those that are executives of other firms. The research also finds that female directors play a crucial role in shaping corporate governance and performance. The study shows that the presence of female directors, particularly those with executive backgrounds, has a positive impact on M&A announcement returns and takeover premiums. The research also finds that the primary profession of female directors is considered by appointing firms when they assign these directors to important monitoring committees.

Conclusion

The study concludes that female directors play a crucial role in shaping corporate governance and performance. The research shows that the presence of female directors, particularly those with executive backgrounds, has a positive impact on M&A announcement returns and takeover premiums. The study also highlights the need for appointing firms to consider the primary profession of female directors when assigning them to important monitoring committees. The research contributes to our understanding of the motivations and behaviors of female independent directors in corporate finance and the impact of their primary profession on board dynamics and corporate outcomes.