Gender, ethnicity and stock liquidity: evidence from South Africa

This paper examines the impact of the gender and ethnic composition of corporate boards (board of directors and audit committee) on stock liquidity in the context of South Africa. More specifically, we focus on the interaction effects of gender diversity and ethnic diversity on stock liquidity. Using a sample of listed South African firms for the period 2009-2013, we find that firms with more female or black directors on corporate boards are associated with a higher level of stock liquidity. However, the interaction effect indicates that the positive impact of ethnic diversity on stock liquidity is attenuated with the greater presence of gender diversity. These findings are explained through board effectiveness and corporate information flows.