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Did California's Enactment Of Board Gender Quota Law Cause A Significant Decline In Shareholder Value?

As noted by Professor Stephen Bainbridge yesterday, a recent study has concluded that California's enactment of SB 826 has "resulted in a significant decline in shareholder value for firms headquartered in California".  Sunwoo Hwang and Professors Anil Shivdasani and Elena Simintzi at the University of North Carolina's Kenan-Flagler Business School authored the study.  They found that following announcement of the signing of SB 826, companies headquartered or incorporated in California experienced a statistically significant abnormal return of -1.4%.

The authors note that the law will have a disparate impact depending upon the size of the firm.  Based on the current board composition for all California firms in the Russell 3000 index, they found that for large firms, "the median shortfall in female directors is 1 representing 13% of board size while for smaller firms, the median shortfall is two directors, representing 25% of the current board size".  

Given the attention already bestowed on SB 826, I expect more studies and more debate.

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