Forced Board Changes: Evidence from Norway
34 Pages Posted: 25 Mar 2011 Last revised: 31 Jan 2012
Date Written: March 9, 2011
The recently introduced gender quota on Norwegian corporate boards dramatically increased the share of female directors.This reform offers a natural experiment to investigate changes in corporate governance from forced increases in gender diversity, and whether these changes in turn impact firm performance.I find that investors anticipate the new directors to be more effective in firms with less information asymmetry between insiders of the firm and outsiders. Firms with low information asymmetry experience positive and significant cumulative abnormal returns (CAR) at the introduction of the quota, whereas firms with high information asymmetry show negative but insignificant CAR.
Keywords: Natural experiment, Corporate governance
JEL Classification: G34
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