Study Finds "A Robust and Significantly Negative Stock Market Reaction" To California's Gender Quota Mandate

Allen Matkins
Contact

Allen Matkins

A study by an international team of scholars has concluded that California's imposition of a gender quota on publicly held corporations with their principal executive offices in the state resulted in a "robust and significantly negative stock market reaction".  von Meyerinck, Felix and Niessen-Ruenzi, Alexandra and Niessen-Ruenzi, Alexandra and Schmid, Markus and Davidoff Solomon, Steven, As California Goes, So Goes the Nation? Board Gender Quotas and Shareholders' Distaste of Government Interventions (August 31, 2021).   Specifically, these researchers found that the mean reduction in shareholder value amounts to $104.51 million and $328.31 million for non-California for California firms, respectively (based on the mean market capitalization in the two groups).

What I found most interesting was the authors' theory that "independent of the nature the quota, shareholders may have a general distaste of governmental interference with company affairs and do not appreciate legislation that forces companies to change their organizational structure to achieve non-monetary goals."   This should be something for the Securities and Exchange Commission to take into account when it considers mandating ESG disclosures.

California's gender quota mandate is codified at Sections 301.3 and 2115.5 of the California Corporations Code.   A constitutional challenge to the law is scheduled to go to trial on December 1.  Crest v. Padilla (Cal. Super. Ct. Case No. 19STCV27561.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins | Attorney Advertising

Written by:

Allen Matkins
Contact
more
less

Allen Matkins on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.