As California Goes, So Goes the Nation? Board Gender Quotas and the Legislation of Non-Economic Values
66 Pages Posted: 3 Jan 2019 Last revised: 16 Jan 2020
Date Written: January 15, 2020
In 2018, California became the first U.S. state to introduce a mandatory board gender quota for all firms headquartered in the state. We document negative announcement returns to the adoption of the quota for Californian firms, but also large negative spillover effects on a matched group of non-Californian firms, particularly those located in states that followed California’s legislative lead in the past by raising minimum wages or legalizing cannabis. Frictions on the director labor market only explain a small fraction of value losses of Californian firms. They do not explain the negative spillover effects on firms in other states. We propose shareholders’ fear of further legislation of non-economic values as a new explanation for the negative announcement returns to gender quotas. In line with this view, we find that firms with higher policy sensitivity show the strongest reaction.
Keywords: Gender quota, Regulation, Economic policy uncertainty, Stakeholder perspective
JEL Classification: J16, J78, G38, K38
Suggested Citation: Suggested Citation