Financial reporting quality effects of imposing (gender) quotas on boards of directors

Abstract

We analyze whether the passage of a Norwegian law requiring a minimum of a 40 percent of women on the boards of public firms affected financial reporting quality. Our results are consistent with a decrease in financial reporting quality for the firms that were most affected by the passage of the law, and with the effects being relatively short-lived. We also find evidence that board members characteristics, beyond gender, changed due to this law. These changes can partially explain our findings. Overall, our results show that mandating large changes to board composition over a relatively small period of time negatively affects financial reporting.