45 Pages Posted: 14 Mar 2016 Last revised: 27 Dec 2016
Date Written: December 26, 2016
In 2005, Norway became the first country to mandate gender-balanced corporate boards. We hypothesize that a gender quota reduces director CEO experience and increases board independence. Contrary to prior research, our robust performance estimates fail to reject an overall value-neutral effect of the quota, even for firms with all-male boards. We also show that, while boards lost some CEO experience, firms did not increase board size (to retain key male directors) or change legal form (to avoid the quota), and managed to maintain board network power. We conclude that investors and firms alike viewed the quota as a relatively low-cost constraint.
Keywords: Gender quota, director independence, valuation effect, long-run performance, corporate conversion, busy directors, director network power
JEL Classification: G34, G35
Suggested Citation: Suggested Citation
Eckbo, B. Espen and Nygaard, Knut and Thorburn, Karin S., How Costly Is Forced Gender-Balancing of Corporate Boards? (December 26, 2016). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 463/2016; Tuck School of Business Working Paper No. 2746786. Available at SSRN: https://ssrn.com/abstract=2746786
By Alex Edmans