Does the EU "Women on Boards" Directive affect the financial performance of STOXX 600 Firms? A quantitative analysis.

Details

Supervisors

Van de Velden, Kim

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

enThis thesis examines whether Directive (EU) 2022/2381 on gender balance in corporate boards has produced measurable effects on the financial performance and governance structure of European listed companies. The analysis uses a Difference-in-Differences (DiD) design applied to a two-period panel (2021–2025) of 245 STOXX Europe 600 firms. Treatment companies belong to nine EU member states without prior binding gender quota legislation. Control companies come from France, Italy, and Portugal, which had adopted binding legislation before 2022. Belgium serves as a placebo group. Four outcome variables are examined: return on equity (ROE), the price-to-book ratio (P/B), the percentage of women on the Board of Directors (CG627), and the percentage of women among Key Executives (CG631). The headline estimator is OLS with firm-clustered standard errors (CR2). Seven complementary methods test the robustness of the results: firm fixed effects, Wilcoxon non-parametric tests, Propensity Score Matching, Doubly Robust (AIPW) estimation, permutation inference, cluster bootstrap, and an individual firm-level DiD. The DiD estimates for ROE, P/B, and Key Executive representation are statistically non-significant across all methods. The estimate for board representation is non-significant in the headline specification and most robustness checks, with one matched-sample exception that the Doubly Robust estimator contradicts. The Belgian placebo group progresses as much as the Treatment group on board diversity despite facing no new regulation, indicating that the observed governance improvements reflect a broader pan-European trend rather than a direct compliance response to the Directive. These findings are consistent with the meta-analytic literature and do not support the hypothesis that mandatory gender diversity legislation imposes short-term financial costs.