2015 GCGC

5-6 June 2015

Do mandatory board gender quotas reduce firm value?


Karin Thorburn

Professor of Finance


Belen Villalonga

Professor of Management and Organizations


A board gender quota reduces firm value if it forces the appointment of under-qualified female directors. We test this hypothesis using Norway’s 2005 board gender-quota law, which increased the average fraction of female directors from 5% in 2001 to 40% by 2008. Statistically robust analyses of quota- induced shareholder announcement returns, and of long-run stock and accounting performance, fail to reject the hypothesis of a zero valuation effect of this economy-wide shock to board composition and director independence. Evidence on female director turnover and changes in director networks also fails to suggest that qualified female directors were in short supply.

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