Stock Price Reactions to Policies Promoting Women on Boards: Evidence from Germany
35 Pages Posted: 26 Jul 2017 Last revised: 27 Apr 2018
Date Written: April 1, 2018
This study discusses differences in the effectiveness of voluntary and mandatory policies promoting women on boards and their potential effects on stock price returns. Furthermore, it classifies the announcements of the policy proposals discussed in Germany and analyzes their impact using event study methodology. The event date identification follows a two-step procedure employing search engine query data from GoogleTrends and traditional search methods using Lexis-Nexis and newspapers. One key event produces negative significant cumulative abnormal stock returns (CAR) of approximately 1.3 percentage points. Further regression analysis of the CAR reveals that the share of women on the supervisory board of firms which were not planned to be subject to the mandatory board gender quota exhibits significant negative CAR around the event days. On the contrary, the effect of the share of women on the supervisory board is positively associated with the CAR for firms planned to be subject to the mandatory board gender quota. Thus, the implementation of a mandated quota was costly especially for shareholders of companies not affected by the mandatory quota.
Keywords: gender quota, shareholder value, corporate governance, women on boards
JEL Classification: G34, G38, J20, J48
Suggested Citation: Suggested Citation