Mandatory Disclosure and Female Representation in Corporate Leadership: Evidence from NASDAQ

Over the course of the summer, I had the privilege to work with Bhargav Gopal and his team of researchers on the topic of a disclosure rule introduced by NASDAQ in 2021. With increasing regulatory focus on corporate board diversity, prior research has focused on gender quotas, but not on mandatory disclosure. His paper contributes to research regarding the effect of mandatory disclosure on corporate female diversity, short-term and long-term effects on financial performance, and explores why some firms choose compliance and some do not. I participated in a review of previous quota and disclosure literature, contributed to writing the literature review, and researched datasets on heterogeneity and investor reputation sensitivity. The sample used in the research included NASDAQ- and NYSE-listed firms, focusing on U.S. firms present in all three datasets: CRSP, Compustat, and BoardEx. There were two main approaches: a Difference-in-Differences (DiD) design for Board Composition and Long-Term Financial Outcomes, and an analysis of Short-Term Financial Outcomes. The short-term outcomes were studied using an Event Study Methodology and a Portfolio Approach. Throughout my work on the literature review and supporting disclosure knowledge, I kept these methodologies in mind. There was a moderate increase in gender diversity in response to NASDAQ’s requirement. However, point estimates were much smaller relative to gender quotas, diversity campaigns led by institutional investors, and other mandatory diversity disclosure policies. The relatively small increase in female diversity suggests minimal reputational consequences for disclosing no diversity. I look forward to contributing more to this paper going forward.