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

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.