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The valuation impact of gender quotas in the boardroom: Evidence from the European markets

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  • Fernández-Méndez, Carlos
  • Pathan, Shams

Abstract

We investigate stock market reactions to the announcement of the new, June 2022 European Union (EU) regulation on board gender diversity, which requires firms to appoint a minimum of 33% female directors (or 40% female non-executive directors). We find that the abnormal market returns surrounding the EU announcement are positive. We also note that the observed positive valuation effects are particularly strong for: (1) firms in countries with softer existing regulations on board gender diversity; and (2) firms with a larger gap between current levels of board gender diversity and the 33% gender quota. Our analysis of the EU legislation on gender quotas offers solid evidence that board gender quotas are perceived by investors as beneficial, particularly for firms exposed to a large gender imbalance.

Suggested Citation

  • Fernández-Méndez, Carlos & Pathan, Shams, 2023. "The valuation impact of gender quotas in the boardroom: Evidence from the European markets," Finance Research Letters, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323000739
    DOI: 10.1016/j.frl.2023.103699
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    References listed on IDEAS

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    More about this item

    Keywords

    Women directors; Board gender diversity; Gender quota regulation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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