In 2018 and 2020, California adopted laws requiring corporations headquartered in the state to diversify their Boards of Directors. Specifically, the laws required that Boards include female representation and a minimum number of people from under-represented racial, ethnic or sexual orientation background.
These laws did not survive long. They were successfully challenged in state and federal court. But the laws may have been on the books long enough to get some sense of their effects on firm value.
A new study by Jonathan Klick, "Market Response to Court Rejection of California's Board Diversity Laws," just published in the Journal of Empirical Studies, looks at the effect of the invalidation of the Board diversity laws on firm valuation. Here is the abstract:
