The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation
Abstract
In 2003, a new law required that 40% of Norwegian firms' directors be women--at the time only 9% of directors were women. We use the prequota cross-sectional variation in female board representation to instrument for exogenous changes to corporate boards following the quota. We find that the constraint imposed by the quota caused a significant drop in the stock price at the announcement of the law and a large decline in Tobin's Q over the following years, consistent with the idea that firms choose boards to maximize value. The quota led to younger and less experienced boards, increases in leverage and acquisitions, and deterioration in operating performance. Copyright 2012, Oxford University Press.Download Info
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Bibliographic Info
Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.
Volume (Year): 127 (2012)
Issue (Month): 1 ()
Pages: 137-197
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Daunfeldt, Sven-Olov & Rudholm, Niklas, 2012. "Does Gender Diversity in the Boardroom Improve Firm Performance?," HUI Working Papers 60, HUI Research.
- Schwartz-Ziv, Miriam & Weisbach, Michael S., 2011.
"What Do Boards Really Do? Evidence from Minutes of Board Meetings,"
Working Paper Series
2011-19, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Miriam Schwartz-Ziv & Michael Weisbach, 2011. "What do Boards Really Do? Evidence from Minutes of Board Meetings," NBER Working Papers 17509, National Bureau of Economic Research, Inc.
- Geiler, P.H.M., 2012. "Essays on executive remuneration contracting: Managerial power, corporate payout, and gender discrimination," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5590842, Tilburg University.
- Stefan Bauernschuster & Anita Fichtl, 2013. "Brauchen wir eine gesetzliche Frauenquote?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(02), pages 39-48, 01.
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