How Costly Is Forced Gender-Balancing of Corporate Boards?

45 Pages Posted: 14 Mar 2016 Last revised: 27 Dec 2016

B. Espen Eckbo

Tuck School of Business at Dartmouth; European Corporate Governance Institute (ECGI)

Knut Nygaard

Oslo Business School at Oslo and Akershus University College of Applied Sciences (HiOA)

Karin S. Thorburn

Norwegian School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: December 26, 2016

Abstract

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

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

B. Espen Eckbo (Contact Author)

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States
603-646-3953 (Phone)
603-646-3805 (Fax)

HOME PAGE: http://www.tuck.dartmouth.edu/eckbo

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Knut Nygaard

Oslo Business School at Oslo and Akershus University College of Applied Sciences (HiOA) ( email )

Pilestredet 35
Oslo, 0167
Norway

Karin S. Thorburn

Norwegian School of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway
+4755959283 (Phone)

HOME PAGE: http://www.nhh.no/cv/thorburn

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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