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Mandatory Gender Balance and Board Independence

Author

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  • Øyvind Bøhren
  • Siv Staubo

Abstract

We find that forcing radical gender balance on corporate boards is associated with increased board independence and reduced firm value. A mandatory 40% gender quota shifts the average fraction of independent directors from 46% to 67% because female directors are much more often independent directors than males are. This shock to board independence via gender quotas is strongest in small, young, profitable, non†listed firms with powerful stockholders and few female directors. Such firms also lose the most value, presumably because they need advice from dependent directors the most and monitoring by independent directors the least.

Suggested Citation

  • Øyvind Bøhren & Siv Staubo, 2016. "Mandatory Gender Balance and Board Independence," European Financial Management, European Financial Management Association, vol. 22(1), pages 3-30, January.
  • Handle: RePEc:bla:eufman:v:22:y:2016:i:1:p:3-30
    DOI: 10.1111/eufm.12060
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    File URL: https://doi.org/10.1111/eufm.12060
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    References listed on IDEAS

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    Cited by:

    1. Rebérioux, Antoine & Roudaut, Gwenael, 2016. "Gender Quota inside the Boardroom: Female Directors as New Key Players?," CEPREMAP Working Papers (Docweb) 1603, CEPREMAP.
    2. Garanina, Tatiana & Muravyev, Alexander, 2019. "The Gender Composition of Corporate Boards and Firm Performance: Evidence from Russia," IZA Discussion Papers 12357, Institute of Labor Economics (IZA).
    3. Jing-Hui Kwan & Wee-Yeap Lau, 2020. "Corporate Governance and Cash Holdings in Hospitality Firms: Do Board Characteristics Matter?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(7), pages 816-832, July.
    4. Paul B. McGuinness & João Paulo Vieito & Mingzhu Wang, 2020. "Proactive government intervention, board gender balance, and stakeholder engagement in China and Europe," Asia Pacific Journal of Management, Springer, vol. 37(3), pages 719-762, September.
    5. Greene, Daniel & Intintoli, Vincent J. & Kahle, Kathleen M., 2020. "Do board gender quotas affect firm value? Evidence from California Senate Bill No. 826," Journal of Corporate Finance, Elsevier, vol. 60(C).
    6. Simona Comi & Mara Grasseni & Federica Origo & Laura Pagani, 2020. "Where Women Make a Difference: Gender Quotas and Firms’ Performance in Three European Countries," ILR Review, Cornell University, ILR School, vol. 73(3), pages 768-793, May.
    7. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).

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