Mandating Women on Boards: Evidence from the United States

40 Pages Posted: 17 Oct 2018 Last revised: 18 Nov 2018

See all articles by Sunwoo Hwang

Sunwoo Hwang

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Anil Shivdasani

University of North Carolina Kenan-Flagler Business School

Elena Simintzi

University of North Carolina Kenan-Flagler Business School; Centre for Economic Policy Research (CEPR)

Date Written: October 13, 2018

Abstract

On September 30, 2018, California became the first US state to mandate women directors on corporate boards. The passage of this law resulted in a significant decline in shareholder value for firms headquartered in California. The decline in shareholder value is directly related to the number of female directors that firms are required to add to the board. We argue that supply-side constraints contribute to the costs imposed by the mandate. The expected costs of additional female directors are higher for firms that face a more limited director pool and for those with weak corporate governance. Our findings indicate that mandated increases in gender diversity on corporate boards are detrimental to shareholder value.

Keywords: board of directors, gender diversity, female, women, directors

JEL Classification: G3, K2, J2, J7

Suggested Citation

Hwang, Sunwoo and Shivdasani, Anil and Simintzi, Elena, Mandating Women on Boards: Evidence from the United States (October 13, 2018). Kenan Institute of Private Enterprise Research Paper No. 18-34. Available at SSRN: https://ssrn.com/abstract=3265783 or http://dx.doi.org/10.2139/ssrn.3265783

Sunwoo Hwang

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://sites.google.com/view/sunwoohwang

Anil Shivdasani (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
919-962-3182 (Phone)
919-962-2068 (Fax)

Elena Simintzi

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building, Room 4200B
300 Kenan Center Drive
Chapel Hill, NC 27599-3490
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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