Mandating Diversity: The Impact of California’s SB826 on Female Board Representation

Abstract

Gender diversity in corporate governance draws increasing attention from firms as they consider how to improve board representation. In 2018, California passed Senate Bill 826 (SB826), the first U.S. law requiring publicly traded firms to appoint at least one female director. The repeal of SB826 in 2022 created an opportunity to test whether such mandates lead to structural change that lasts, rather than temporary compliance. We analyze over 100,000 board appointment records from BoardEx from 2002-2025 using a difference-in-differences (DiD) design with firm and year fixed effects. Firms from California are compared to matched control firms in New York, Texas, Florida, Illinois, and Massachusetts, states without board diversity mandates but with comparable governance environments. We find that female board representation in California increased by 4.7% during SB826 enforcement and remained 3.7% higher after repeal, relative to control firms. These changes were statistically significant, suggesting a durable policy effect. We also observe weaker upward trends in control states, implying potential national spillover. Our findings indicate that mandates can trigger structural behavioral shifts in corporate governance, even when time-bound and repealed. Future work will explore whether these changes impact firm valuation, and whether reputational or institutional forces can help sustain progress after the mandate ends.