Are Women Underpriced? Board Diversity and IPO Performance

Over the last decade, practitioners have used economic arguments to claim that gender diversity has a positive impact on firm value. If one focuses on the initial returns to U.S. firms going public over this period with bulge bracket investment bank advisors, the authors find evidence that investors value diversity, but this does not translate into an effect on valuation beyond the issue date. There is no difference in economic fundamentals such as higher profitability or abnormal stock market performance of gender-diverse firms 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, an increased focus on corporate social responsibility, and the improved qualifications and experience of female board members over this period. JEL Classification: G24, G30, J16 Keywords: Initial Public Offerings; Going Public Process; Gender Diversity; Underpricing; Investment Banks