TY - JOUR
T1 - Do board gender quotas affect firm value? Evidence from California Senate Bill No. 826
AU - Greene, Daniel
AU - Intintoli, Vincent J.
AU - Kahle, Kathleen M.
N1 - Funding Information:
We thank Shane Johnson, Douglas Cumming (the Editor), and two anonymous referees for helpful comments. Taylor Brown and Dylan Kozin provided excellent research assistance. This research was funded, in part, by a Summer Research Grant from the Department of Finance at Clemson University.
Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2020/2
Y1 - 2020/2
N2 - 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.
AB - 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.
KW - Boards of directors
KW - Corporate governance
KW - Female directors
KW - Gender diversity
KW - Gender quota
KW - Regulation
UR - http://www.scopus.com/inward/record.url?scp=85074230960&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85074230960&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2019.101526
DO - 10.1016/j.jcorpfin.2019.101526
M3 - Article
AN - SCOPUS:85074230960
VL - 60
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
M1 - 101526
ER -