On the Effectiveness of Gender Quotas: Insights From Shareholder Preferences

ABSTRACT Research Question/Issue This study examines whether the shareholder preferences for female directors alter around the introduction of mandated gender quotas in France. In addition, we analyze whether shareholders revalue female qualifications different from male ones around quota introductions. Research Findings/Insights We observe greater shareholder support for female nominees subsequent to the quota introduction. However, the disparities in voting outcomes between female and male nominees can be entirely explained by controlling for director characteristics. This suggests that female directors, with valuable characteristics such as independence, are to a greater extent nominated post‐quota. An important discovery from our analysis is that shareholders revise their assessment of female qualifications post‐quota, thereby establishing female qualifications as equally valuable as those of their male counterparts. Theoretical/Academic Implications Contrary to the arguments of gender quota opponents, our findings indicate that the supply of qualified female candidates meets the quota induced incremental demand. The results suggest that the prior underrepresentation of female directors stems from director labor market frictions. Overall, our study has significant implications for the ongoing debate concerning mandated gender quotas in shaping corporate governance practices. Practitioner/Policy Implications Our analysis has policy implications, as neither shareholder votes for female directors nor the stock market reactions around the quota introduction show evidence of mandated gender quotas having adverse effects. Instead, we observe positive externalities by altering shareholders' perceptions of the qualifications of female directors. This suggests that mandated gender quotas can serve as a pivotal catalyst for change, even in countries with notably low female pre‐quota board representation.