Making honest men of them: Institutional investors,financial reporting,and the appointment of female directors to all-male boards |
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| Institution: | 1. Shenzhen Audencia Financial Technology Institute, Shenzhen University, 3688 Nanhai Avenue, Nanshan District, Shenzhen, China;2. Monash Business School, Monash University, Wellington Rd, Clayton, VIC 3800, Australia;3. School of Business and Creative Industries, University of Sunshine Coast, 90 Sippy Downs Dr, Sippy Downs, QLD 4556, Australia;4. Adelaide Business School, Adelaide University, Adelaide, SA 5005, Australia;1. Department of Economics and Finance, Woody L. Hunt College of Business, The University of Texas at El Paso, 500 W. University Ave., El Paso, TX 79968, United States of America;2. Department of Finance, College of Business, Florida State University, United States of America;1. Monetary and Economic Department, Bank for International Settlements, Basel, Switzerland;2. Finance Department, School of Business Administration, American University of Sharjah, PO Box 26666, Sharjah, United Arab Emirates;3. Department of Economics and Finance, Brunel University London, Uxbridge, Middlesex UB8 3PH, UK;1. School of Business and Management, Shanghai International Studies University, 1550 Wenxiang Road, Shanghai 201620, China;2. SKEMA Business School, 99 Ren’ai Road, Suzhou 215123, China;3. School of Business, Nanjing University, 16 Jinyin St., Nanjing 210000, China;4. Li Anmin Institute of Economic Research, Liaoning University, 66 Chongshan Middle Road, Shenyang 110036, China |
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| Abstract: | 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. |
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