How Deep is the Labor Market for Female Directors? Evidence from Mandated Director Appointments
68 Pages Posted: 18 Oct 2021 Last revised: 12 May 2022
Date Written: May 12, 2022
We examine the depth of the labor market for female directors following an exogenous shock to demand caused by California Senate Bill 826. Despite a surge in female appointments, new female director qualifications remain stable when benchmarked to control groups, indicating a deep labor market. Relative to the same control groups, we likewise find little evidence that investors view female director appointments more negatively following the law. However, stock returns to new female director appointments do not offset negative returns to the 2018 enactment of the law, suggesting that a limited supply of directors cannot fully explain the negative investor reaction to the mandate.
Keywords: Boards of directors, Gender diversity, Regulation, Labor Market
JEL Classification: G3, G34, G38, K2, K22, J2, J7
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