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Market reactions to the appointment of women to the boards of Malaysian firms

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  • Ku Ismail, Ku Nor Izah
  • Abdul Manaf, Kamarul Bahrain

Abstract

This study examines market reactions to the appointment of women to corporate boards, and observes if their attributes and role they play in monitoring affect firm value. We observe 127 Malaysian firms that appoint women directors over the period 1999–2011. We use the market model to assess abnormal returns surrounding the appointment of women directors from day −10 to day 10. Using conventional t-tests, share time series tests and rank tests, we find that investors welcome the appointment of women directors. A positive average abnormal return (AAR) is observed on day −1 using all three tests. Cumulative average abnormal returns (CAAR) are positive over the period day 1 to day 10. We also find that investors are more likely to favor women who are prominent, young, have no international exposure, and have no family relationship with any other director. Our findings support the initiative taken by the Malaysian Government to promote women’s participation on corporate boards.

Suggested Citation

  • Ku Ismail, Ku Nor Izah & Abdul Manaf, Kamarul Bahrain, 2016. "Market reactions to the appointment of women to the boards of Malaysian firms," Journal of Multinational Financial Management, Elsevier, vol. 36(C), pages 75-88.
    • Handle: RePEc:eee:mulfin:v:36:y:2016:i:c:p:75-88
    DOI: 10.1016/j.mulfin.2016.04.004
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    2. Yahya Uthman Abdullahi & Rokiah Ishak & Norfaiezah Sawandi, 2018. "Outsider vs insider: Does firm governance matter?," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 689-699, June.
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    More about this item

    JEL classification:

    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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