How Do Markets React to Women Leaders? An IPO Investigation

The growing global emphasis on diversity, equity, and inclusion has also put the spotlight on the role of gender in the corporate world. Women have increasingly found a place in senior leadership and boards owing to regulatory and societal changes. Extant literature has also discussed the competitive advantage firms can gain by leveraging the potential of women in the workplace. A lot of this research explores women on boards, given the recent regulatory focus globally, but there is much less research on the representation of women in top and senior management teams (TSMT). Given the increasing value associated with gender diversity and adopting ESG guidelines, why is the representation of women still so low in TSMT? Is it because investors are disinterested? This Chapter explores how investors react to the presence of women in TSMT through the demand for Initial Public Offerings (IPOs) with gender diversity in top management teams. Using two recent IPO waves in the Indian market, a country that has recently mandated gender-diverse boards and ESG disclosures, this study focuses on subscription levels of IPOs by investor type and their inclusion of women in TSMT, which remains an unregulated space. The results show that informed investors demand gender diversity and subscribe more to IPOs of firms with women representation in TSMT. An understanding of how markets react to women leaders will not only contribute to capital-raising decisions but also inform policy and society