THE CHANGING OF THE BOARDS: THE IMPACT ON FIRM VALUATION OF MANDATED FEMALE BOARD REPRESENTATION

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 crosssectional variation in female board representation to instrument for exogenous changes to corporate boards following the quota. We find that the cons...

Full description

Saved in:

Bibliographic Details
Published in:	The Quarterly journal of economics 2012-02, Vol.127 (1), p.137-197
Main Authors:	Ahern, Kenneth R., Dittmar, Amy K.
Format:	Article
Language:	eng
Subjects:	Board of directors Boards of directors Business structures Business valuation Chief executive officers Corporate boards Corporate governance Cross-sectional analysis Economic models Economic theory Executives Female labour Gender equality Law firms Men Norway Quotas Senior management Stock prices Studies Tobin's Q Valuation Western Europe Women Women workers Work quotas
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

Description
Summary:	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 crosssectional 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.
ISSN:	0033-5533 1531-4650