Mandatory quotas for female representation on boards have produced broadly positive effects—except in stock market performance.

A study looking at research studies around the world found that they mostly uncovered good outcomes from female boardroom quotas but, when it came to stock prices and firm value, most suggested poor performance.

The new research, from a team at the Central European University (CEU) in Vienna, looked at 51 studies across 11 countries.

The team found quotas largely produce positive outcomes on female representation, firm performance and board performance.

The team—Costanza De Acutis, Andrea Weber and Elisabeth Wurm—concludes: “These findings put concerns that imposed gender quotas might reduce the quality of decision making bodies, or deteriorate firm performance, into perspective.”

Norway was the first country to introduce a gender quota back in 2008, when it mandated boards be 40% female. Other countries followed—including France, Belgium and Italy in 2011 and Germany in 2016. Most countries gave their companies several years to comply.

Quotas were met largely with non-executive appointments but only after stiff opposition to mandatory rules. Many argued it would produce appointments based on gender rather than qualifications, restrict the freedom of businesses, and lead to “tokenism”.

All the arguments have fallen away.

Women on UK boards

The UK resisted compulsory intervention but there has been pressure on companies nevertheless through voluntary targets set, firstly, by the government-commissioned Davies Review. This introduced a target of 25% female representation by 2015. That was followed by the Hampton-Alexander review of 2016, which upped the target for FTSE 350 companies to 33%. Annual reports have maintained the pressure on high-profile companies to address gender representation.

Over the past couple of years, representation in the UK’s largest companies has reached 40% or more and attention has shifted to improving the number of women in executive roles.

One study, from headhunters Russell Reynolds, found that, while women tended to dominate the role of HR director at the biggest companies, they do less well securing other positions such as chief executive or chief financial officer.

Anna Penfold of Russell Reynolds said earlier this year: “Too often, the CHRO is the sole woman’s voice in the senior executive team. The CHRO is an increasingly complex function and key ally for the CEO, but we must not let progress in board diversity come purely from one profession.”

The FTSE Women Leaders Review, the successor to Hampton-Alexander, found this year that women hold 42.1% of FTSE 350 directorships. However, only 15% of the executive roles are held by women.

There has been recent focus too on the talent pipeline for women. The CEU study reveals its own concern, saying “clear evidence that more gender diversity in the boardroom spills over to gender diversity at lower levels of the company hierarchy and reduces gender gaps is limited.

“Additional policy efforts to achieve this goal might be necessary.”