Original Research

Market responses to appointment of women and men as directors: A study of top 40 Johannesburg Stock Exchange-listed companies

Maruping J. Mothapo, Olive Stumke, Beitske M. van der Niet
South African Journal of Economic and Management Sciences | Vol 27, No 1 | a5287 | DOI: https://doi.org/10.4102/sajems.v27i1.5287 | © 2024 Maruping J. Mothapo, Olive Stumke, Beitske M. van der Niet | This work is licensed under CC Attribution 4.0
Submitted: 18 August 2023 | Published: 06 March 2024

About the author(s)

Maruping J. Mothapo, School of Accounting Sciences, Faculty of Economic and Management Sciences, North-West University, Vanderbijlpark, South Africa
Olive Stumke, School of Accounting Sciences, Faculty of Economic and Management Sciences, North-West University, Vanderbijlpark, South Africa
Beitske M. van der Niet, School of Accounting Sciences, Faculty of Economic and Management Sciences, North-West University, Vanderbijlpark, South Africa

Abstract

Background: This study investigates market reactions to the appointment of women and men as directors on the top 40 Johannesburg Stock Exchange (JSE)-listed company boards. Both the social and business rationale for the appointment of women is contextualised to evaluate the potential bias towards their appointment as directors. This research contributes to the literature by concurrently analysing both genders.

Aim: The primary objective of the study was to assess market reactions to the new appointment of women and men as directors of the top 40 JSE-listed companies using an event study.

Setting: This study focussed on companies from the top 40 JSE-listed companies’ index. The period analysed was from the year 2015 to 2019.

Method: The event study methodology was used to analyse announcements of 17 women and 29 men as directors from companies across 12 sectors of the top 40 JSE-listed companies.

Results: The study identified a significant negative market reaction to the appointment of women as directors, potentially because of gender bias. The appointment of men as directors was met with positive market reactions, though the results were statistically insignificant. The results align with prior studies that gender bias may impact the negative reaction towards the appointment of women.

Conclusion: The study suggests gender is relevant to shareholders because of different market reactions. Companies should not disregard the benefits of board diversity despite negative reactions in the short term.

Contribution: This study informs boards of possible market reactions to gender diversity efforts. It emphasises the economic and ethical benefits and necessitates stakeholder engagement.


Keywords

event study; women; board appointments; directors; gender diversity; market reaction

JEL Codes

G14: Information and Market Efficiency • Event Studies • Insider Trading; G34: Mergers • Acquisitions • Restructuring • Corporate Governance; J71: Discrimination; M51: Firm Employment Decisions • Promotions

Sustainable Development Goal

Goal 5: Gender equality

Metrics

Total abstract views: 1195
Total article views: 848


Crossref Citations

No related citations found.