Résumé
Purpose The purpose of this paper is to examine the gender diversity on boards and its effect on stock market liquidity in French boardrooms. Design/methodology/approach Using a sample of French firms between 2002 and 2012 listed on the Paris Stock Exchange (SBF120), the study uses ordinary least squares and three-stage least squares (3SLS) regressions to address endogeneity concerns on the board gender diversity. Findings The results show that stock market liquidity is positively and significantly associated with the presence of women directors. The authors find that investors' decisions vary according to their positions in the board: women independent members decrease illiquidity costs, while the presence of female inside directors increases daily trading volume. In addition, the presence of female inside directors increases the firm's ability to implement better strategies that cope with economic, social and environmental constraints which leads investors to positively react. Surprisingly, the presence of female independent directors reduces company involvement in sustainable development projects.
Originality/value This study addresses the endogeneity between stock market liquidity, corporate governance and gender diversity. It is the first study to distinguish between the effects of women inside and independent directors on investors' trading decisions.