As California Goes, So Goes the Nation? Board Gender Quotas and the Legislation of Non-Economic Values
82 Pages Posted: 3 Jan 2019 Last revised: 19 Jun 2020
Date Written: June 19, 2020
In 2018, California introduced a board gender quota for all firms headquartered in the state. Even though the constitutionality of the law is still debated, we document large negative announcement returns of -2.6% for California firms and spillover effects of -1.9% for non-California firms. These effects are only partly explained by labor market frictions. We propose shareholders’ disapproval of the government’s attempt to legislate non-economic values as a novel explanation. Consistently, we find that California and non-California firms with higher sensitivity to policy uncertainty react more negatively. Firms in states known to follow California’s legislative lead also react more strongly.
Keywords: Gender quota, Regulation, Economic policy uncertainty
JEL Classification: J16, J78, G38, K38
Suggested Citation: Suggested Citation