Gender Quotas on Corporate Boards: A Panel Data Analysis of the Short-Term Effects of California Senate Bill No. 826

Abstract: Gender quotas on corporate boards of directors have become a popular tool to address the persistent disparities in female representation at the top of the corporate hierarchy. In this thesis, I study the effects of the first mandatory gender quota in the United States, California Senate Bill No. 826, implemented in early 2019. I build a panel dataset consisting of data on board composition as well as firm characteristics and financial performance for both firms headquartered in California and firms headquartered outside California. Using a Difference-in-Differences strategy combined with Propensity Score Matching, I examine the effects of the quota on board gender diversity, board size, and financial performance. My findings suggest that, despite having milder sanctions than some European board quotas, the Californian quota led to a significant increase in the share of women on the boards of the affected companies compared to control companies. I observe positive effects on both board size and number of female directors on the board, however, due to Californian companies following a slightly different trend relative to control companies before the implementation of the quota, these results should be interpreted with caution. Furthermore, I do not find reliable evidence of the effects of the quota on financial performance.