Do Board Gender Quotas Affect Firm Value? Evidence from California Senate Bill No. 826

56 Pages Posted: 15 Oct 2019 Last revised: 19 Dec 2019

See all articles by Daniel Greene

Daniel Greene

Clemson University

Vincent Intintoli

Clemson University, Department of Finance

Kathleen M. Kahle

University of Arizona - Department of Finance

Date Written: October 2, 2019

Abstract

We examine stock market reactions, direct costs of compliance, and board adjustments to California Senate Bill No. 826 (SB 826), the first mandated board gender diversity quota in the United States. Announcement returns average -1.2% and are robust to the use of multiple methodologies. Returns are more negative when the gap between the mandated number and the pre-SB 826 number of female directors is larger. These negative effects are less severe for firms with a greater supply of female candidates, and for those that can more easily replace male directors or attract female directors. For small firms, the annual direct cost of compliance through board expansion is non-trivial, representing 0.76% of market value. Following SB 826, firms significantly increase female board representation, and the increase is greater for firms in California than control firms in other states.

Keywords: Boards of directors, Female directors, Gender diversity, Gender quota, Corporate Governance, Regulation

JEL Classification: G34, G38, G14, K22, J20, J21

Suggested Citation

Greene, Daniel and Intintoli, Vincent and Kahle, Kathleen M., Do Board Gender Quotas Affect Firm Value? Evidence from California Senate Bill No. 826 (October 2, 2019). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3463844 or http://dx.doi.org/10.2139/ssrn.3463844

Daniel Greene (Contact Author)

Clemson University ( email )

101 Sikes Ave
Clemson, SC 29634
United States

Vincent Intintoli

Clemson University, Department of Finance ( email )

Clemson, SC 29634
United States
864-656-2263 (Phone)

Kathleen M. Kahle

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-7489 (Phone)

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