Are Women Undervalued? Board Gender Diversity and IPO Underpricing

Are Women Undervalued? Board Gender Diversity and IPO Underpricing

P. Raghavendra Rau, Jason Sandvik, Theo Vermaelen

Series number :

Serial Number: 
756/2021

Date posted :

May 10 2021

Last revised :

August 18 2021
SSRN Share

Keywords

  • Initial Public Offerings • 
  • Going Public Process • 
  • Gender Diversity • 
  • underpricing • 
  • Investment Banks • 
  • Corporate governance

We show that investor preferences for diversity have had a significant effect on the initial returns earned by U.S. firms going public with gender diverse boards over the past decade. There is no difference in economic fundamentals such as higher profitability or abnormal stock market performance between these firms and firms without gender-diverse boards following the IPO.

The underpricing appears to reflect recent institutional investor demand for diverse firm boards during the IPO process, possibly as a result of social pressure or an increased focus on corporate social responsibility.

Authors

Real name:
P. Raghavendra Rau
Real name:
Jason Sandvik