Mandating com

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That is, boards do not increase the number of diverse directors on the board, but rather increase the types of diversity on the board.A board may go from having one female and two non-white directors, for example, to having two female and one non-white director.Some of the difference is due to the jobs people choose; most of the difference is due to how jobs are compensated.She concludes that the income disparity is not due to wage discrimination but because the labour markets incentivise men and women differently.In 2017, for the 1,500 largest US companies (all board statistics are my own, using data from advisory firm ISS): With such gender imbalances, most experts agree that board diversity needs to change. One concern comes from an efficient markets perspective.This argument suggests that if having more women on boards were best for business, greedy value-maximising companies would already be doing it.Oxford finance professor, Renée Adams, has also written, on this site and elsewhere, that in order to reach the boardroom, women need to stay in the workforce.She is not a fan of quotas, in general, but would rather see regulators focus on other structural initiatives that encourage women to stay in the workforce.

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Boards with five or fewer directors will need two female directors by 2021 and larger boards will need three.So firms may appoint more women but at the expense of having fewer other underrepresented minorities or vice versa.To best appreciate the benefits associated with governments mandating gender boardroom diversity, we must focus on the long-term.Non-compliant firms would be subject to (relatively small) fines.To assess the scope of the change, let’s review the statistics on diversity in the upper ranks of corporations.

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