Market reactions to audit committee director's gender: Evidence from US-traded foreign firms

This study investigates whether the appointment of a female to the audit committee of a foreign issuer in the US is positively associated with subsequent market price reaction. We hypothesize that female members on the audit committee can strengthen corporate governance by their conservative and ethical qualities. Accordingly, such appointments deliver a positive message to capital market participants. In order to observe the impact of audit committee gender diversity on foreign fi rms, we include all audit committee appointments for UStraded foreign fi rms from 2002 to 2009. We fi nd that the appointment of female audit committee members has signifi cant positive cumulative abnormal returns compared to the appointment of male audit committee members.