The Valuation Impact of Gender Quotas in the Boardroom: Evidence from the European Markets

Abstract

We investigate stock market reactions to the announcement of the new, June 2022 European Union (EU) regulation on board gender diversity. We find positive abnormal market returns surrounding the EU announcement. The positive valuation effects are particularly strong for: firms in countries with softer existing regulations on board gender diversity; and firms with a larger gap between current levels of board gender diversity and the 33% gender quota. Thus, our analysis of the EU legislation on gender quotas offers solid evidence that board gender quotas are perceived by investors as beneficial, particularly for firms exposed to a large gender imbalance.

Keywords: Women directors, Board gender diversity, Gender quotas