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  5. Effects of Corporate Board Mandates
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Effects of Corporate Board Mandates

Paper Session

Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)

Loews Philadelphia Hotel
Hosted By: American Finance Association
  • David Matsa, Northwestern University

Does Mandating Women on Corporate Boards Backfire?

Jingjing Li
,
University of Virginia
Kai Li
,
University of British Columbia
Bo Bian
,
University of British Columbia

Abstract

This paper studies how external pressure to increase board gender diversity affects a firm's demand for female labor. Applying computational linguistic methods to job ads, we show that firms with a higher share of female directors write less female-friendly job ads. This is especially true in firms facing greater shareholder pressure, leaning toward Republican ideologies, or lacking female leadership. Using SB 826 in California as an exogenous shock, we find that board gender quotas can causally reduce firms' demand for female labor. Experimental evidence confirms this reduction and identifies psychological reactance and perceived gender norm violation as the primary mechanisms.

Board Gender Quotas and Female Borrowing: Evidence from Loan-Level Data

Fabrizio Core
,
Luiss Guido Carli University
Angelo D'Andrea
,
Bank of Italy
Tim Eisert
,
NOVA University Lisbon
Daniel Urban
,
Erasmus University Rotterdam

Abstract

We examine how female board representation influences banks' propensity to lend to female-led firms. Using the introduction of a mandatory gender quota in Italy and loan-level data, we find that as banks increase female board representation, they lend more to female-led firms, both on the extensive and intensive margins. These lending relationships extend to smaller firms but do not result in higher ex-ante or ex-post non-performing exposures. Additionally, we provide novel evidence of spillover effects from the board gender quota to rank-and-file employees, as banks promote more women. Higher promotion rates, in turn, are associated with greater female credit growth.

The Role of Mandatory Director Retirement Policies in Corporate Governance

Feng Guo
,
Iowa State University
Tingting Liu
,
University of Tennessee-Knoxville
Mohammad Ali Nari Abyaneh
,
Iowa State University

Abstract

We construct a unique dataset on mandatory retirement policies for independent directors at U.S. public firms from 1994 to 2020 by combining machine learning techniques with manual inspections. We investigate factors that drive firms to adopt mandatory retirement policies and assess the value implications of such decisions. We document an increasing trend in policy adoption, particularly among S&P 1500 firms. Our results indicate that firms with greater monitoring needs are more likely to implement mandatory retirement policies, while those with greater advising needs are less likely to do so. Moreover, mandatory retirement policies are associated with an increase in firm value when monitoring benefits are high but a decrease in value when advising benefits are high. This study is the first to examine both the determinants and outcomes of mandatory retirement policies, suggesting that their value effect depends on firms’ specific governance needs.

Discussant(s)
Paige Ouimet
,
University of North Carolina-Chapel Hill
Andrew Hertzberg
,
Federal Reserve Bank of Philadelphia
Vyacheslav Fos
,
Boston College
JEL Classifications
  • G3 - Corporate Finance and Governance