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.
Adolf A. Berle Professor of Law
Professor of Finance / London Business School
C.V.Starr Professor of Economics