Do board gender quotas affect firm value? Evidence from California Senate Bill No. 826

Daniel Greene, Vincent J. Intintoli and Kathleen M. Kahle

Journal of Corporate Finance, 2020, vol. 60, issue C

Abstract: We examine stock market reactions, direct costs of compliance, and board adjustments to California Senate Bill No. 826 (SB 826), the first mandated board gender diversity quota in the United States. Announcement returns average −1.2% and are robust to the use of multiple methodologies. Returns are more negative when the gap between the mandated number and the pre-SB 826 number of female directors is larger. These negative effects are less severe for firms with a greater supply of female candidates, and for those that can more easily replace male directors or attract female directors. For small firms, the annual direct cost of compliance through board expansion is non-trivial, representing 0.76% of market value. Following SB 826, firms significantly increase female board representation, and the increase is greater for firms in California than control firms in other states.

Keywords: Boards of directors; Female directors; Gender diversity; Gender quota; Corporate governance; Regulation (search for similar items in EconPapers)
JEL-codes: G14 G34 G38 J20 J21 K22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (52)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:60:y:2020:i:c:s092911991930375x

DOI: 10.1016/j.jcorpfin.2019.101526

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