How Deep is the Labor Market for Female Directors? Evidence from Mandated Director Appointments

Abstract

We examine the depth of the labor market for female directors following an exogenous shock to demand caused by California Senate Bill 826. Despite a surge in female appointments, new female director qualifications remain stable when benchmarked to control groups, indicating a deep labor market. Relative to the same control groups, we likewise find little evidence that investors view female director appointments more negatively following the law. However, stock returns to new female director appointments do not offset negative returns to the 2018 enactment of the law, suggesting that overall, investors still anticipate negative effects.