Do investors equally value women directors? Evidence from financial expertise

Evidence on whether women directors contribute to shareholder value is mixed. We contribute to this debate by examining the market reaction to the appointment of women directors with financial expertise. Using a sample of 5,018 new board appointment announcements by US public companies from 2002 to 2018, we find that investors react more favourably to the appointment of women directors with financial expertise than to those without such expertise. We also show that investors reward the appointment of women directors with accounting financial expertise (e.g. CFOs, auditors), whereas appointments of women directors with non-accounting financial expertise (e.g. CEOs, presidents) receive an insignificant market response. Our cross-sectional analyses further reveal that market appreciation of the benefits brought by appointing women experts is influenced by their independence, leadership role, type of financial expertise, the firm’s corporate governance environment, and managerial ability. Overall, we advance the literature by showing that it is not the mere presence of women directors in the boardroom that matters, but rather the expertise they bring. Accordingly, our results provide evidence-based insights with policy relevance for enhancing the value contribution of women directors in corporate governance.