The Swedish stock market's sentiment on female board members

Abstract

The purpose of this thesis is to show how the Swedish market reacts to the appointment of a new female board member and whether this has a negative or positive affect on the share price in the short term. The theoretical framework complying of the efficient market hypothesis and behavioral finance sets the basis for the hypotheses and analysis. By using data from 120 observations from publicly traded companies on the Stockholm stock exchange an event study was created to examine the effect of the nomination of a female board member on the stock. A t-test was done to assess whether the means are statistically significant and test our hypotheses. The results show that the nomination of the first female director has a negative effect on the company’s stock price. However, the market reaction is positive when the third female board member is nominated. This suggests that the current number of female board members at the time of the nomination affects the market reaction. A conclusion is that the impact of social reform and pressures of workplace equality is affecting stakeholder behaviour. However, further research is required to establish the relationship between various independent variables and the effects on the share price.