Quota or Disclosure? Evidence from Corporate Board Gender Diversity Policies

In this paper, I compare two policy interventions used in Europe to increase gender equality on corporate boards: quota versus disclosure. While quota has a stronger enforcement effect, disclosure allows firms to decide on the optimal board gender ratio taking into consideration their own information. This information includes the friction that causes low female representation on boards. I show that it is important to separate supply and demand side frictions. In industries that have a low supply of female directors, quota leads firms to hire more foreign female directors, new female directors with no prior board experience, and more female directors with PhDs. In industries not constrained by female director supply, disclosure and quota can be equally effective in shattering the glass ceiling. Additionally, I find that effects are stronger in countries where there is a stronger social norm on gender equality. Last, I do not find this increase in board gender diversity leads to better financial performance.