Comment on “Regulating Gender Diversity: Evidence from California Senate Bill 826”

Prior studies draw mixed conclusions on the market response to California SB 826, the first board gender diversity mandate in the United States. We find that these discrepancies stem from two factors: confusion about the legislative process and the use of different return methodologies. We find that the response to early dates in the legislative process yields largely insignificant and sometimes conflicting results, depending on the return methodology used. This result is consistent with our finding that many of these dates generated little interest from investors. Returns are mostly negative and significant on the date the bill was signed into law. Additionally, all models show a negative and significant relation between the signing-day return and the number of female directors needed to meet the law. This paper was accepted by Eric So, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.01986 .