Mandatory Gender Balance and Board Independence

European Financial Management 22, 2016, 3-30.

40 Pages Posted: 30 Dec 2014 Last revised: 12 Aug 2017

See all articles by Øyvind Bøhren

Øyvind Bøhren

BI Norwegian Business School

Siv Staubo

BI Norwegian Business School

Multiple version iconThere are 2 versions of this paper

Date Written: December 10, 2014

Abstract

We find that forcing radical gender balance on corporate boards is associated with increased board independence and reduced firm value. A mandatory 40-percent gender quota shifts the average fraction of independent directors from 46 to 67 percent because female directors are much more often independent directors than males are. This shock to board independence via gender quotas is strongest in small, young, profitable, non-listed firms with powerful stockholders and few female directors. Such firms also lose the most value, presumably because they need advice from dependent directors the most and monitoring by independent directors the least.

Keywords: corporate governance, regulation, board independence, female directors, gender quota

JEL Classification: G30, G38

Suggested Citation

Bøhren, Øyvind and Staubo, Siv, Mandatory Gender Balance and Board Independence (December 10, 2014). European Financial Management 22, 2016, 3-30.. Available at SSRN: https://ssrn.com/abstract=2543871

Øyvind Bøhren (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway
46410503 (Phone)

Siv Staubo

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

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