Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 5/2011: Forced board changes: Evidence from Norway.

Knut Nygaard ()
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Knut Nygaard: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: The recently introduced gender quota on Norwegian corporate boards dramatically increased the share of female directors. This reform offers a natural experiment to investigate changes in corporate governance from forced increases in gender diver- sity, and whether these changes in turn impact firm performance. I find that investors anticipate the new directors to be more effective in firms with less information asymmetry between insiders of the firm and outsiders. Firms with low information asymmetry experience positive and significant cumulative abnormal returns (CAR) at the introduction of the quota, whereas firms with high information asymmetry show negative but insignificant CAR.

Keywords: Natural experiment; Regulation; Corporate governance; Gender quota.

JEL-codes: G34; G38

32 pages, March 9, 2011

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