Published in:GMU Working Paper in Economics ; No. 21-04
Extent:
1 Online-Ressource (49 p)
Language:
English
DOI:
10.2139/ssrn.3794517
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 28, 2021 erstellt
Description:
We study shareholder support for corporate board nominees in the context of the California gender quota, which was passed in 2018. Using hand-collected data for approximately 600 firms, we show that, prior to the quota, female nominees received greater shareholder support than their male counterparts. This is consistent with a pre-quota environment in which female board nominees were held to a higher standard than male nominees. Second, we show that incumbent female directors in the post-quota environment receive greater support than incumbent men, while support for new (mandated) female nominees decreases to the level of support for new male nominees. This indicates that the quota led to a conversion in the bar for men and women to become board nominees, and that it did not lead to new female board nominees being of lower quality than male nominees. We likewise challenge the notion that the negative stock price reaction to the quota reflects value destruction due to an insufficient supply of female directors. Instead, we provide evidence that dysfunctional board dynamics are driving the reaction, in the sense that stock prices reacted negatively to entrenched boards who failed to turn over the least supported directors when adjusting their boards to comply with the new law