Busy Female Directors

In the last 20 years many countries have introduced ad hoc regulations to increase gender diversity in boardrooms. The empirical evidences about the consequences of such regulations on firm performance are mixed. In this paper I investigate the impact of mandatory gender quotas policies on the environmental and social (ES) performance of firms by studying the case of California which was the first US state to impose a binding gender quota on boards. In September 2018 a quota for corporate boards was passed (CA Senate Bill 826) requiring quotas on female board members for all publicly held firms headquartered in the state starting from the end of 2019. I document an increase in firms with overboarded female directors, following the introduction of CA Senate Bill. Moreover, the causal effect of quota introduction on directors’ busyness is tested using Synthetic Control Methodology. In panel regressions, I find that overboarded female directors are associated to lower ES rating. My findings shed lights on the unintended consequences of gender quota regulations. The expected long term policy implication is a decrease of this negative effect, as there will be more women in the corporate directors market in the next years. More importantly, an efficient policy would have additionally introduced a cap to the number of multiple-directorships