Does gender diversity on boards reduce information asymmetry problems? Empirical evidence from the French market

2019 ◽  
Vol 10 (2) ◽  
pp. 144-166
Author(s):  
Nadia Loukil ◽  
Ouidad Yousfi ◽  
Raissa Wend-kuuni Yerbanga
Keyword(s):  
Asymmetric Information ◽  
Stock Market ◽  
Gender Diversity ◽  
Market Liquidity ◽  
Idiosyncratic Volatility ◽  
Independent Directors ◽  
Corporate Boards ◽  
Content Type ◽  
Bid Ask Spread ◽  
The Impact

Purpose The purpose of this paper is to investigate the effect of female members in boards of directors on asymmetric information in the French stock market. Design/methodology/approach The authors use two proxies for asymmetric information: the idiosyncratic volatility and the bid-ask spread. This study is conducted on all listed firms in the SBF 120 index between 2002 and 2012. Findings Results show that gender diversity in boardrooms has a negative effect on the level of private information in stock markets and reduces the bid-ask spread. However, these effects are significant in family-controlled firms: female inside directors significantly increase the idiosyncratic volatility and the bid-ask spread, while female independent directors decrease both proxies for stock market liquidity. Research limitations/implications Our empirical findings contribute to the current debate on the benefits of gender diversity on corporate boards from the market perspective. It shows that, under specific conditions, financial markets could be receptive to the presence of female directors in boardrooms. Practical implications Practitioners and policymakers advocate the benefits of gender diversity on corporate boards. This paper shows that when the protection of minority shareholders is poor, the stock market is receptive to the presence of women independent directors, only in family controlled firms. This is a further argument that could help women to overcome glass-ceiling barriers they usually face to achieve top management positions. Originality/value This paper provides support for the increased attention paid to gender-diverse boards. It addresses the market sensitivity toward the presence of women members in French boardrooms and their positions. This is the first paper, to the best of our knowledge, to address how appointing women to different positions in the boardroom could provide signals to investors in the presence of asymmetric information. French firms are mostly family controlled. Thus, the findings bring valuable information of the impact of board diversity on the stock market considering family and nonfamily firms.

Does gender diversity on boards influence stock market liquidity? Empirical evidence from the French market

2019 ◽  
Vol 19 (4) ◽  
pp. 669-703 ◽  
Author(s):  
Nadia Loukil ◽  
Ouidad Yousfi ◽  
Raissa Yerbanga
Keyword(s):  
Stock Market ◽  
Least Squares ◽  
Gender Diversity ◽  
Market Liquidity ◽  
Independent Directors ◽  
Women Directors ◽  
Content Type ◽  
Female Directors ◽  
Inside Directors ◽  
Stock Market Liquidity

Purpose The purpose of this paper is to examine the gender diversity on boards and its effect on stock market liquidity in French boardrooms. Design/methodology/approach Using a sample of French firms between 2002 and 2012 listed on the Paris Stock Exchange (SBF120), the study uses ordinary least squares and three-stage least squares (3SLS) regressions to address endogeneity concerns on the board gender diversity. Findings The results show that stock market liquidity is positively and significantly associated with the presence of women directors. The authors find that investors’ decisions vary according to their positions in the board: women independent members decrease illiquidity costs, while the presence of female inside directors increases daily trading volume. In addition, the presence of female inside directors increases the firm’s ability to implement better strategies that cope with economic, social and environmental constraints which leads investors to positively react. Surprisingly, the presence of female independent directors reduces company involvement in sustainable development projects. Practical implications The empirical findings contribute to the current debate on the benefits of gender diversity on corporate boards and the effectiveness of gender-quota laws. It shows that appointing insider female’ directors incite investors to trade more stocks while appointing independents ones reduces their trading costs. Social implications This paper shows that the benefits of female directors appointing depend on their independence of management team. Originality/value This study addresses the endogeneity between stock market liquidity, corporate governance and gender diversity. It is the first study to distinguish between the effects of women inside and independent directors on investors’ trading decisions.

scholarly journals Initial bank loans, zero-leverage firms and stock market liquidity

2019 ◽  
Vol 46 (5) ◽  
pp. 1028-1051 ◽  
Author(s):  
Sijia Zhang ◽  
Andros Gregoriou
Keyword(s):  
Stock Market ◽  
Stock Price ◽  
Trading Volume ◽  
Market Liquidity ◽  
Bank Loans ◽  
Bank Loan ◽  
Market Reactions ◽  
Content Type ◽  
Bid Ask Spread ◽  
Long Run

Purpose The purpose of this paper is to examine stock market reactions and liquidity effects following the first bank loan announcement of zero-leverage firms. Design/methodology/approach The authors use an event studies methodology in both a univariate and multivariate framework. The authors also use regression analysis. Findings Using a sample of 96 zero-leverage firms listed on the FTSE 350 index over the time period of 2000–2015, the authors find evidence of a significant and permanent stock price increase as a result of the initial debt announcement. The loan announcement results in a sustained increase in trading volume and liquidity. This improvement continues to persist once the authors control for stock price and trading volume effects in both the short and long run. Furthermore, the authors examine the spread decomposition around the same period, and discover the adverse selection of the bid–ask spread is significantly related to the initial bank loan announcement. Research limitations/implications The results can be attributed to the information cost/liquidity hypothesis, suggesting that investors demand a lower premium for trading stocks with more available information. Originality/value This is the first paper to look at multiple industries, more than one loan and information asymmetry effects.

Ownership concentration, earnings management and stock market liquidity: evidence from Malaysia

2017 ◽  
Vol 17 (3) ◽  
pp. 490-510 ◽  
Author(s):  
Hamdan Amer Al-Jaifi
Keyword(s):  
Stock Market ◽  
Earnings Management ◽  
Instrumental Variables ◽  
Generalized Method Of Moments ◽  
Market Liquidity ◽  
Ownership Concentration ◽  
Estimation Methods ◽  
Content Type ◽  
Stock Market Liquidity ◽  
The Impact

Purpose This paper aims to examine whether ownership concentration and earnings management affect the stock market liquidity of Malaysian firms. Design/methodology/approach This study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression is used to examine the relationships. The study undertakes a sensitivity test by regressing the main study variables by using different measurements. Another robustness test is then used, where a regression based on the change in variables and a one-year lag of the independent variables are used. Furthermore, to alleviate the concern of possible endogeneity, the simultaneity and reverse causality are checked using the lag of the dependent variable, fixed effect regression, two-stage least squares using the instrumental variables and the generalized method of moments using instrumental variables analysis. Findings The study finds that firms with a high level of ownership concentration have discrepancies in information between informed and uninformed traders, which impair the stock market liquidity. In addition, this study finds that firms with high earnings management experience greater liquidity. A possible explanation for this is that firms might manage earnings to convey private information to enhance the information content of the earnings. Overall, the evidence suggests that manipulating earnings signals information informatively, particularly in a country with a higher level of ownership concentration and a higher likelihood of expropriating minority shareholders. Originality/value This study enriches the limited empirical research devoted to the impact of earnings management and ownership concentration on stock market liquidity especially in the context of emerging economies. The findings of this study are robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias.

scholarly journals Liquidity in global real estate securities markets

2016 ◽  
Vol 34 (4) ◽  
pp. 321-346 ◽  
Author(s):  
Nicole Lux ◽  
Alex Moss
Keyword(s):  
Real Estate ◽  
Stock Market ◽  
Market Liquidity ◽  
Company Size ◽  
Small Companies ◽  
Stock Performance ◽  
Content Type ◽  
The Usa ◽  
Market Capitalisation ◽  
The Impact

Purpose – The purpose of this paper is to test the relationship between liquidity in listed real estate markets, company size and geography during different market cycles, specifically pre-crisis (2002-2006) and post-crisis (2010-2014). Further, the study analyses the impact of stock liquidity on stock performance. In a previous study the authors examined the impact of liquidity on the valuation of European real estate shares. The result showed that there is a strong relationship between liquidity, valuation and market capitalisation post the Global Financial Crisis. Design/methodology/approach – The paper studies the linkages between regional market liquidity and company size for 60 listed real estate companies globally and determines the key drivers of company stock market liquidity pre- and post-crisis as well as the impact on stock performance. Analysis of variance is used to test cross-sectional independence in market liquidity combined with the Tukey’s post hoc test. The selected test indicators of liquidity to capture market depth and market tightness are daily stock turnover as percentage of market capitalisation and daily bid-ask spreads. Findings – Findings confirm previous studies that market liquidity factors are correlated globally over time indicating markets interdependence. However, sample groups by company size and geography form independent samples with different sample means, thus specific liquidity levels in each market may be different. First, stock turnover levels have not recovered post-crisis to pre-crisis levels in the majority of markets while spreads have continued moving downward to nearly insignificant levels in line with the rest of the equity market. Second, with regards to stock performance, the European bias previously detected is not apparent in the USA, and there is no evidence of the small cap vs large cap effect of small companies achieving superior returns, although smaller companies have outperformed in Europe and Asia in each of the last three years (2012-2014). Practical implications – The key implication is that although spread levels for smaller companies are higher, implying a slight risk premium when investing in small companies, this did not manifest into consistent superior stock market returns in the periods studied. In a mature market such as the USA or UK, liquidity levels in terms of stock turnover are higher and spreads are lower thus reducing trading costs, making them more attractive for investors. Originality/value – This research brings together previous analysis on stock market liquidity and stock performance on a global market level. It further tests the dependence of market liquidity on two key indicators, namely, geography and company size and analyses market changes with respect to liquidity pre- and post-crisis.

Board independence, gender diversity and CEO compensation

2017 ◽  
Vol 17 (5) ◽  
pp. 845-860 ◽  
Author(s):  
Ramzi Benkraiem ◽  
Amal Hamrouni ◽  
Faten Lakhal ◽  
Nadia Toumi
Keyword(s):  
Ceo Compensation ◽  
Gender Diversity ◽  
Joint Effect ◽  
Independent Directors ◽  
Board Independence ◽  
Women Directors ◽  
Content Type ◽  
Corporate Managers ◽  
Board Decision Making ◽  
The Impact

Purpose This paper aims to investigate the joint effect of board independence and gender diversity on the effectiveness of boards in monitoring CEO compensation in a continental European context, i.e. France. Design/methodology/approach Fixed-effect regressions are used to study the impact of board independence, gender diversity and their interaction, i.e. the proportion of female independent directors on the different components of CEO compensation (total, fixed and variable). Findings The authors observe that both the proportions of independent directors and women sitting on the boards positively influence the various components of CEO compensation. However, the interaction of these factors, i.e. the proportion of female independent directors, is negatively associated with CEO compensation. These results suggest that independent women directors improve board effectiveness in monitoring CEO compensation, especially its fixed component. Originality/value The results of this research help to elucidate the importance of women being appointed to boards as independent directors to properly monitor managerial pay. These results provide support to the approach of the French Cope-Zimmerman law of January 2011, which promotes female representation on boards as independent directors to enhance board decision-making. Thus, evidence presented and discussed in this paper should provide useful insights for academics, corporate managers and regulators.

scholarly journals Stock market liquidity, the great lockdown and the COVID-19 global pandemic nexus in MENA countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anas Alaoui Mdaghri ◽  
Abdessamad Raghibi ◽  
Cuong Nguyen Thanh ◽  
Lahsen Oubdi
Keyword(s):  
Stock Market ◽  
Negative Impact ◽  
Market Liquidity ◽  
Mena Region ◽  
Stock Market Returns ◽  
Content Type ◽  
Mena Countries ◽  
Global Pandemic ◽  
Stock Market Liquidity ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact of the global coronavirus (COVID-19) pandemic on stock market liquidity, while taking into account the depth and tightness dimensions.Design/methodology/approachThe author used a panel data regression on stock market dataset, representing 314 listed firms operating in six Middle East and North African (MENA) countries from February to May 2020.FindingsThe regression results on the overall sample indicate that the liquidity related to the depth measure was positively correlated with the growth in the confirmed number of cases and deaths and stringency index. Moreover, the market depth was positively related to the confirmed cases of COVID-19. The results also indicate that the liquidity of small cap and big cap firms was significantly impacted by the confirmed number of cases, while the stringency index is only significant for the liquidity depth measure. Moreover, the results regarding sectors and country level analysis confirmed that COVID-19 had a significant and negative impact of stock market liquidity.Research limitations/implicationsThis paper confirms that the global coronavirus pandemic has decreased the stock market liquidity in terms of both the depth and the tightness dimensions.Originality/valueWhile most empirical papers focused on the impact of the COVID-19 global pandemic on stock market returns, this paper investigated liquidity chock at firm level in the MENA region using both tightness and depth dimensions.

Would diversified corporate boards add value? The case of banking institutions in Malaysia

2018 ◽  
Vol 10 (2/3) ◽  
pp. 218-228 ◽  
Author(s):  
Ribed Vianneca W. Jubilee ◽  
Roy W.L. Khong ◽  
Woan Ting Hung
Keyword(s):  
Firm Value ◽  
Banking Sector ◽  
Gender Diversity ◽  
Governance Structure ◽  
Corporate Boards ◽  
Board Diversity ◽  
Content Type ◽  
Banking Institutions ◽  
The Government ◽  
The Impact

Purpose Board diversity has gained increasing attention and has been widely posited as a driver for firm value. The purpose of this paper is to provide empirical evidence on the relation of gender diversity of corporate boards with the value of banking institutions in Malaysia. Design/methodology/approach The sample comprised of ten banking institutions listed on Bursa Malaysia with data observations from 2007 to 2016. Panel data techniques were employed to investigate the relationship between having female directors and firm performance in terms of values generated as indicated by Tobin’s Q. Findings The results revealed a positive relationship between the proportion of female director and the value of the bank. Interestingly, this study found that appointment of female independent directors tends to be negatively related to the value of such institutions. Practical implications There remains a shortage of research studying the impact of gender equality on corporate boards in Malaysia generally and in the banking sector specifically. Thus, this study contributes a significant knowledge on the value implication of board diversity. The findings also provide useful insights on the developmental policy initiated by the government to increase female participation in the top management. Originality/value This study contributes to the literature by bridging the knowledge gap on board diversity in the governance structure of banking institutions. It also provides theoretical contributions to the development of regulatory policy in relation to gender diversification in corporate leadership.

Women on boards in India: a need or tokenism?

2018 ◽  
Vol 56 (8) ◽  
pp. 1769-1786 ◽  
Author(s):  
Varnita Srivastava ◽  
Niladri Das ◽  
Jamini Kanta Pattanayak
Keyword(s):  
Gender Diversity ◽  
Positive Association ◽  
Regulatory Reform ◽  
Corporate Boards ◽  
Content Type ◽  
Level Of Involvement ◽  
Female Directors ◽  
Women On Boards ◽  
The Right ◽  
The Impact

Purpose The purpose of this paper is to examine the significance of gender diversity on corporate boards in India in the light of recent regulatory reform introduced in the Companies’ Act, 2013 which mandated the presence of at least one woman on the corporate boards of all the listed firms. Design/methodology/approach Based on a panel of 300 firm-year observations for 15 years from 2001 to 2015, regression analysis has been conducted to analyze the relation between gender-related variables of corporate boards with firm-specific financial characteristic, cost of equity (COE) and return on assets (ROA) of firms listed in CNX Nifty, a major financial market index of India. Findings The analysis indicates that boards with gender diversity explain a slightly more than 5.5 percent change in a firm’s COE and have a much higher impact of 45 percent on a firm’s ROA. The presence of female directors on the boards and their independence have a negative association with the COE, whereas the level of involvement of female directors on different committees has a positive association with the ROA. Practical implications The findings may help theorists in defining the right mix of female on the corporate boards in an emerging economy. Also, by taking input from the findings, regulators and industry can formulate policies to foster gender diversity on corporate boards in India. Originality/value This study considers the recent regulatory norm introduced in India. This issue has still not been discussed and analyzed by researchers in India. It attempts to explain the impact a gender diverse board can make on a firm’s performance. It also makes valuable recommendations to improve the norms intended to more effectively foster gender diversity on corporate boards in India.

Female board directorship and earnings management

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yosra Mnif ◽  
Imen Cherif
Keyword(s):  
Earnings Management ◽  
Family Firms ◽  
Gender Diversity ◽  
Corporate Boards ◽  
Women Directors ◽  
Homogeneous Sample ◽  
Content Type ◽  
Gender Diverse ◽  
Gender Quota ◽  
The Impact

Purpose This paper aims to examine the impact of female board directorship on the extent of earnings management. Design/methodology/approach The research hypotheses have been tested using both univariate and multivariate analyzes based on a sample of 198 firm-year observations from closely-held family firms listed on the SBF 120 over the period 2010–2018. Findings The empirical results first indicate that female board participation reduces the level of earnings management. When looking at women positions in the companies’ boardrooms, the authors reveal that the negative linkage between female board directorship and earnings management remains constant for independent female directors while the opposite holds for their family-affiliated counterparts. Further, the gender quota reform is shown to mitigate the adverse relationship between gender-diverse corporate boards and the extent of earnings management. These results seem sound, as they hold unchanged for the several measures of, both, boardroom gender diversity and earnings management used in the empirical study. In a supplementary analysis, the authors provide evidence that the association between the presence of women directors on the companies’ boards and earnings management depends, in a different way, on the size of the audit firm in a joint auditing context. Originality/value The country and the period considered in this paper are noteworthy characteristics that enhance the value of this research. The present study is relevant because it examines the relationship between female boardroom participation and earnings management using a homogeneous sample of family-owned and -managed companies within which shareholders and board members share identical motives for manipulating earnings in one of the leading countries in the world with regard to family ownership dominance (i.e. France). Moreover, this paper is considered to be very timely, as it explores, contrarily to previous related studies, the years following the implementation of a mandatory gender quota reform in one of the less available countries, to date, that have amended a gender quota law. To the knowledge, besides France, there are a few markets (Norway, Belgium, Finland and Iceland) that have implemented such legislation.

Impact of board characteristics on firm dividends: evidence from India

2019 ◽  
Vol 19 (6) ◽  
pp. 1204-1215 ◽  
Author(s):  
Neeti Khetarpal Sanan
Keyword(s):  
Gender Diversity ◽  
Cash Flows ◽  
Independent Directors ◽  
Cross Sectional ◽  
Dividend Payout ◽  
Content Type ◽  
Board Characteristics ◽  
Female Directors ◽  
Free Cash Flows ◽  
The Impact

Purpose This study examined the impact of board size, independence and gender diversity on firm dividend payout. Furthermore, it examined whether the board characteristic–dividend payout relationship was moderated by free cash flows in the firm. Design/methodology/approach A total of 118 Indian firms representing multiple industries were examined for a period of four financial years from 2013 to 2016. The data are in panel form given the cross-sectional and time series nature of the study. Random effects specification was used for analysis Findings Results of the study indicated that the proportion of independent directors and proportion of female directors on the board have a negative and significant effect on dividend payout. In addition, the results showed a negative and significant moderating role of free cash flows, which implied that the magnitude of the impact of the proportion of independent directors and the proportion of female directors on the board on dividend payout is significantly greater in firms with high free cash flows. Overall, the results suggested that firms whose board characteristics signaled strong governance paid lower dividends. Originality/value This study contributes to a nuanced understanding of internal governance mechanisms by presenting evidence of the substitution hypothesis from an emerging economy, one in which firms operate within a unique regulatory framework of board composition.

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