Is California’s gender quota law harming small businesses

November 12, 2019


A study conducted by three academics has found California’s law requiring companies to have female directors on its boards has already negatively impacted stock prices.

SB 826 requires every publicly traded California company to have one female director on its board by the end of 2019. By the end of 2021, firms with five-member boards must have at least two female directors, and companies with six or more members on its boards must have at least three female directors.

It is estimated that more than 1,000 female directors must be added to California corporate boards by 2021 as a result of the law.

Two Clemson University researchers and a University of Arizona professor conducted a study which found an average -1.2 percent stock price change in the initial market reaction to SB 826.

The authors of the study say the negative market reaction does not suggest the presence of female directors adversely affect a firm’s value. Rather, imposing a constrained optimization on board composition can be costly for some firms.

“We didn’t find a negative reaction to the requirement of adding one female director,” said co-author Vincent Intintoli, an assistant professor of finance in Clemson’s College of Business. “More onerous was the requirement that companies add up to three female directors by 2021.”

Firms with a greater supply of female candidates can more easily replace existing directors and are less negatively impacted by the law. The costs associated with SB 826 compliance are negligible for the largest firms but substantial for the smallest, the study found.

The $100,000 penalty for failure to comply with the law in 2019 is less than the average director’s pay for some firms. But, the penalty increases to $300,000 in 2020, if companies still have not added a female director.


Outrageous to manipulate business decisions based on a farce of promoting gender equality. Another reason to avoid doing business in California as a corporation, costing the state more tax revenue in the long term. Bully tactics by the state with their exorbitant fines and red tape will do little to affect it’s purported purpose of promoting gender equality, resulting in business’ avoidance of such risks by just doing business in a more friendly state…


You read all of the materials right? Because this only effects 800 corporations, only publicly traded ones.

But you can cry about Bully tactics and sing the song about moving to another state like the other right wingers unhappy with the whole world turning to freedom and the rights of citizens……


Easy solution, do what other companies do when they want cheaper fire insurance, reliable sources of electricity, lower taxes, less meaningless regulation, and a workforce that can survive on middle class wages; move to another state. Let the big tech firms pick up the tab for this new Socialist 3rd world state, there are 49 more to choose from.


Funny you should mention that, this “study” is from people in Arizona and South Carolina to help push that concept.

“Socialist 3rd world state” You should move, South Carolina has just what you need.


Uhhh, who said I still live in California? You remember back in the 60’s and 70’s when the conservatives would tell the hippies to “love it or leave it?” Maybe you don’t, watch some vintage videos from the era. When you do, ask yourself “how does it feel now that I support the authoritarians?”

Jorge Estrada

The stock market is all about speculation which is fueled by public perception. As soon as the legislator perfects the control of personal will, these mandates will no longer fail because of problematic free will. How stupid, A septic take is more logical.


I often wish I lived in another State so I could laugh at this stuff, instead of cry…