Abstract
Previous studies have been unable to establish a clear relationship between board gender diversity and firm performance. We argue that this could be due to the failure of these studies to account for both the endogeneity problem and the possible nonlinearity of the relationship between board diversity and firm performance. We overcome these problems by studying the investor reaction at the announcement of a female director's departure. We find a negative market reaction only when this departure drops the gender diversity below a critical level of three women. In all other cases, a director's departure has no significant impact on shareholder wealth. This result is consistent with the assumption of value in diversity and critical mass theory.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Business Governance and Ethics
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
