Does boardroom gender diversity affect shareholder wealth? Evidence from bank mergers and acquisitions

Abstract

We explore the effect of the presence of female directors in boards of directors on the economic impact of bank mergers and acquisitions (M&As). Using a unique, hand‐collected dataset on 1,130 M&As announced by U.S. banks between 2003 and 2018, we find a significant negative relationship between female board membership and shareholder wealth after the banking crisis. Our results are robust to alternative model specifications that control for different proxies for gender diversity, heteroskedasticity, endogeneity and firm‐specific variables. Our findings suggest that board gender diversity should be promoted with caution, and policy makers should acknowledge its limitations as a corporate governance mechanism.

Threshold effects of board gender diversity on firm performance: panel smooth transition regression model

“…The second opinion supports that board gender diversity can result in many disadvantages for corporate performance (Adams and Ferreira, 2009;Ahern and Dittmar, 2012;Ali et al, 2014;Tampakoudis et al, 2020). First, when board members have very different opinions, perspectives and core values, this diversity can generate more team conflicts, less cooperation and can impede the speed and the quality of the board resolutions.…”

“…Using the event study methodology for a dataset of 1,130 mergers and acquisitions' announcements by the US banks during the period 2003-2018, the results show a significant negative relationship between board gender diversity and shareholder wealth. Tampakoudis et al (2020) conclude that board gender diversity should be a limited corporate governance mechanism and ask policymakers and business managers to consider with caution the promotion of female presence on firms' boards.…”

“…More recently, Tampakoudis et al (2020) investigate the effect of board gender diversity on shareholder wealth for the case of banks’ mergers and acquisitions. Using the event study methodology for a dataset of 1,130 mergers and acquisitions’ announcements by the US banks during the period 2003–2018, the results show a significant negative relationship between board gender diversity and shareholder wealth.…”

“…The board of directors is considered by academic researchers and policy makers as one of the main bases of the internal corporate governance mechanisms. It influences strategic decisions and monitors agency issues between managers and shareholders (Benkraiem et al , 2018; Cornett et al , 2009; Fama, 1980; Fama and Jensen, 1983; Hermalin and Weisbach, 1991, 1998; Tampakoudis et al , 2020).…”

Relationship between Women on Board Directors and Economic Value Added: Evidence from Latin American Companies

“…On the other hand, Ref. [62] took a different approach to profitability and focused on the return generated by mergers and acquisitions. They found a negative relationship, concluding that after the crisis, the abnormal returns generated by merger and acquisition announcements are lower for banks with at least one woman on their board directors than for those whose directors are all men.…”