Women directors and market valuation: What are the “Wonder Woman” attributes in banking?

Abstract

This study investigates whether women directors’ attributes affect market valuation for banks. Functional attributes such as independence and leadership are considered together with professional attributes such as financial expertise, education and nationality. We have constructed a unique sample of 1,019 bank-year observations for the period 2007–2017 for 12 developing countries that are characterized by low women’s empowerment/quotas and a dual banking system. Alternative measures for women on the board have been used (i.e. the percentage of women and a dummy indicator). Our findings suggest strong evidence that the presence of women directors on the board is positively associated with bank value. Women as independent board members are also positively associated with market value, whereas women being in a chairperson leadership role has no significant association. Accounting and finance qualifications are positively associated with bank market value, whilst conversely, women directors with a high level of education and those holding international qualifications or whom are foreign, are negatively associated with bank market value. As a mediating effect, we examine the cultural value orientations (i.e. cultural openness to diversity) for our sample countries. Our results demonstrate that women directors have a positive association with bank value in countries which are more open to diversity. The findings regarding women directors’ attributes tend to vary depending on the level of culture openness. We additionally examine the impact of different bank types (i.e. Islamic versus conventional banks) and the financial crisis of 2007.