Boardroom gender diversity and stock liquidity: Evidence from Australia

Abstract

In this study, we investigate the relationship between gender-diverse boards and stock liquidity in Australia. We expect that the gender-diverse boards, with their efficient monitoring functions, lead to higher stock liquidity that has positive implications for market efficiency. Consistent with the notion, we find, using 944 Australian firms from 2008 to 2013, that boardroom gender diversity is significantly and positively associated with stock liquidity. Our findings are robust to a series of endogeneity checks and to alternative proxies for gender diversity and stock liquidity. Our results reject the assumption of women on the board as ‘tokens’ and also provide support to critical mass theory. We contribute to the global debate on the need for more women on corporate boards and provide comprehensive and robust evidence that suggests that having women on corporate boards is positively associated with one of the important characteristics of capital market efficiency, stock liquidity.