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.


Lol at these angry Boomer comments spreading ignorance and hate and Lol at this waste of an article in the midst of a frigging national impeachment.


What a BS title, there are no publicly traded California company’s that are “small businesses”.

Also this is from South Carolina and Arizona “researchers” collecting $ to help prevent this from spreading.


We need more government in our lives, right? Makes me gag!


Compliance with regulations can be costly.

Competence in business often results in profits.

Profits result in increased tax revenue…..

Therefore shackling businesses with compliance that might decrease their competence will result in lower profits and lower tax revenue.

How about business be allowed by government to hire competent people, regardless of race, gender, religion, etc.? Doesn’t that sound progressive and good?

Or, has the “progressive” movement regressed to the point where people are hired on the sole basis of race, gender, etc?


Shareholders vote for directors. Is California taking away my vote? What’s to keep share holders from voting “her” off the board? Are city councils, board of supervisors, and school boards in California also required?


You may no longer hire the most qualified person for the job. Your board of directors must include a set number of females, regardless of qualifications. I wonder if the State will accept, “I identify as a female.” as an excuse? Interesting? What’s next, racial inclusion (again regardless of qualifications)?

Mitch C

I prefer corporations be run by qualified people; their sex is immaterial. What does this stupid statute say about sex change individuals. If a male identifies as female does that count? If I were female appointed to a board based solely on my sex what value would I bring to the bottom line and how would I feel trying to be of value when I had nothing to contribute?


Oh.. You’re on the board of directors? Thats great!..

Yeah. The law required it..


Everything the California legislature does harms small business…


And everything else!