Making honest men of them: Institutional investors, financial reporting, and the appointment of female directors to all-male boards

Karen M Y Lai; Mehdi Khedmati; Ferdinand Gul; Matthew P Mount

doi:10.1016/j.jcorpfin.2022.102334

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Making honest men of them: Institutional investors, financial reporting, and the appointment of female directors to all-male boards

Journal article

Peer reviewed

Making honest men of them: Institutional investors, financial reporting, and the appointment of female directors to all-male boards

Karen M Y Lai, Mehdi Khedmati, Ferdinand Gul and Matthew P Mount

Journal of Corporate Finance, Vol.78, pp.1-21

2023

DOI: https://doi.org/10.1016/j.jcorpfin.2022.102334

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Abstract

institutional investors

board composition

female directors

financial reporting quality

In this paper, we theorize that dedicated institutional investors are more likely than transient institutional investors to appoint female directors to investee firms with all-male boards, particularly those with high opacity. We conjecture that dedicated investors appoint female directors as a governance mechanism to improve the financial reporting quality of these investee firms. Specifically, we find that through the appointment of female directors, dedicated institutional investors trigger the release of stockpiled negative accounting information, thereby increasing the likelihood of a stock price crash risk. We also show that dedicated investors, through the appointment of female directors, improve investee firms' corporate disclosure environment by decreasing earnings management. Finally, we find that through continued service on investee firms' boards, female directors reduce the future likelihood of a stock price crash.

Details

Title: Making honest men of them: Institutional investors, financial reporting, and the appointment of female directors to all-male boards
Authors: Karen M Y Lai (Corresponding Author) - Shenzhen University
Mehdi Khedmati (Author) - Monash University
Ferdinand Gul (Author) - University of the Sunshine Coast, Queensland, School of Business and Creative Industries
Matthew P Mount (Author) - University of Adelaide
Publication details: Journal of Corporate Finance, Vol.78, pp.1-21
Publisher: Elsevier BV
DOI: 10.1016/j.jcorpfin.2022.102334
ISSN: 1872-6313
Organisation Unit: University of the Sunshine Coast, Queensland; School of Business and Creative Industries
Language: English
Record Identifier: 99693198102621
Output Type: Journal article

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Collaboration types: Domestic collaboration; International collaboration
Web Of Science research areas: Business, Finance

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