Board diversity reforms: Do they matter for EU bank performance?

We examine the impact of governance reforms related to board diversity on the performance of EU banks. Using a difference-in-difference approach, we document that reforms increase bank stock returns up to two years after their introduction. We find that the impact is similar across mandatory and affirmative actions, albeit the former increase bank risk. The performancediversity relationship varies with the type of reform. While gender diversity per se seems to have no significant influence, when women’s presence is mandatory it reduces risk. The effectiveness of reforms depends on a country's institutional environment, its legal origin and its cultural openness to diversity.