Center for Advanced Management




Prof. Dr. Markus Schmid (University of St. Gallen)


Datum: 6. Dezember 2018

Zeit: 17.00 - 18.30 Uhr

Ort: Geschwister-Scholl-Platz 1, HGB Raum C 016

Titel: California’s Board Gender Quota: Value Consequences, Spillover Effects, and the Director Labor Market


On September 30, 2018, California became the first US state to introduce a mandatory board gender quota applicable to all firms headquartered in the state. We find that the introduction of the quota was associated with significantly negative announcement returns to California-headquartered firms. Consistent with the quota imposing frictions, this effect is larger for firms requiring more female directors to comply with the quota and is muted for large firms, which are more are more likely to be able to attract female directors if the (local) supply is limited. There is also evidence of spillover effects to non-California-headquartered firms. We find evidence in support of two channels through which these spillover effects operate: First, we find spillover effects to be larger for firms operating in industries in which California-headquartered firms lack more female directors to comply with the quota, suggesting that non-California-headquartered firms may lose valuable female directors to California-headquartered firms. Second, we document negative spillover effects for firms headquartered in states dominated by the Democratic Party, consistent with the idea that these firms are more likely to become subject to a board gender quota. Finally, we show that, already as of month-end October, female representation on the boards of California-headquartered firms increased. Moreover, newly appointed female directors differ significantly in terms of age, independence, and experience from retained and exiting female and male directors.