Changing the Board Game: Horizontal Spillovers of Gender Quotas

The success of board quotas regulation in promoting gender balance hinges on whether its effect extends beyond the (few) firms and jobs directly targeted by law. So far, research has found no evidence of vertical spillovers, that is, indirect effects on workers within targeted firms. We study horizontal spillovers, i.e., the effects on boards of firms not directly targeted by the quotas. We examine the 2011 Italian law mandating gender quotas on boards of listed and state-controlled enterprises (target companies). We define “connected†firms as non-target companies that shared at least one board member with target companies prior to the reform. Employing a difference in differences design, we find that connected firms significantly increase the share of female board members post-reform compared to similar non-connected firms. Accounting for these horizontal spillovers, the effect of the reform on the number of female directors is at least twice as large as that computed for target firms alone, which amounts to approximately 2,500 additional women on boards. Our results suggest that the quotas law indirectly expanded the supply of candidates for directorship positions available to connected firms, rather than increasing their demand for gender diversity on the board. We show evidence that the spillover is largely due to information sharing between target and connected firms.