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

See all articles by Felix von Meyerinck

Felix von Meyerinck

University of St. Gallen - School of Finance

Alexandra Niessen-Ruenzi

University of Mannheim - Department of Finance

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - School of Finance

Steven Davidoff Solomon

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy; European Corporate Governance Institute (ECGI)

Date Written: June 19, 2020

Abstract

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

von Meyerinck, Felix and Niessen-Ruenzi, Alexandra and Schmid, Markus and Davidoff Solomon, Steven, As California Goes, So Goes the Nation? Board Gender Quotas and the Legislation of Non-Economic Values (June 19, 2020). Available at SSRN: https://ssrn.com/abstract=3303798 or http://dx.doi.org/10.2139/ssrn.3303798

Felix Von Meyerinck

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Alexandra Niessen-Ruenzi

University of Mannheim - Department of Finance ( email )

Mannheim, 68131
Germany

Markus Schmid (Contact Author)

University of St. Gallen - Swiss Institute of Banking and Finance ( email )

Rosenbergstrasse 52
St. Gallen, 9000
Switzerland

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Steven Davidoff Solomon

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

University of California, Berkeley - Berkeley Center for Law, Business and the Economy ( email )

Berkeley, CA 94720-7200

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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