Market Reactions to Audit Committee Director’s Gender: Evidence from US-Traded Foreign Firms

• Main Authors: Hua-Wei Huang, Yun-Chia Yan, James M. Fornaro, Ahmed Elshahat
• Format: Article
• Language: English
• Published: Universiti Utara Malaysia 2011-02-01
• Series: International Journal of Banking and Finance
• Online Access: https://www.scienceopen.com/document?vid=992a7fd3-8993-4dea-94a1-762554b72d8e

This study investigates whether the appointment of a female to the audit committee of a foreign issuer in the US is positively associated with subsequent market price reaction. We hypothesize that female members on the audit committee can strengthen corporate governance by their conservative and ethical qualities. Accordingly, such appointments deliver a positive message to capital market participants. In order to observe the impact of audit committee gender diversity on foreign firms, we include all audit committee appointments of US-traded foreign firms from 2002 to 2009. We find that the appointment of female audit committee members has significant positive cumulative abnormal returns compared to the appointment of male audit committee members.