On Sept. 30, 2018, then Governor Jerry Brown signed Senate Bill 826 (SB 826), which requires publically traded companies that have their headquarters in California to have at least one board member who identifies as a woman by the end of 2019. According to a new academic study, companies that meet these criteria have increased their number of female directors by 23 percent since the state passed SB 826. The California Secretary of State may impose fines of $100,000 for the first offense and $300,000 for the second offense for companies that fail to meet the bill’s requirements. Another part of the bill requires that by the end of 2021, these companies have at least two women on five-member boards and at least three on boards with six or more directors.

David Greene, a finance professor at Clemson and the lead author of the report, was surprised that 70 companies, or 14 percent of the 488 California companies that filed a proxy statement in the first half of this year, still did not have a female director listed on the statement. Most of these 70 companies are smaller and many are biotech firms. The authors of the report believe that younger, lesser known companies will have a harder time attracting female candidates than large ones. We will have to wait to see if all of the companies that fall within SB 826’s criteria are able to comply with the new law.

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