How Effective Are Gender Quotas on Corporate Boards?

Introduction

Countries have pursued the goal of creating gender-equal societies by increasing female representation on corporate boards voluntarily or by mandate. The United States does not mandate gender diversity for corporations on a federal level, but some business entities such as the NASDAQ Stock Market, require gender and racial diversity. Even California attempted to impose gender and racial quotas, but lower courts overturned these mandates.1 The issue of quota mandates is not settled, nor will cultural pressure to increase diversity, equity and inclusion (DEI) through representation on boards and leadership abate. Often, legislation and regulation that affect for-profit entities spread to nonprofit organizations, resulting in a shift from their mission and increased costs that can divert resources away from the individuals and causes they serve.

With little data from the United States, Philanthropy Roundtable examined two other countries that have increased female board representation through mandates or voluntary action: Norway and Sweden. This policy brief summarizes the three key points from the research on gender board diversity efforts and its application for the charitable sector:

  1. A diverse board doesn’t guarantee a bigger bottom line. Empirical research is mixed
    at best on questions of board effectiveness and firm performance but offers no causal
    evidence linking the two.
  2. Board gender diversity fails to advance most women. The only women who have
    measurably benefited from greater female representation on boards are the female
    board members themselves, so-called “golden skirts.”
  3. Mandates are unnecessary and counterproductive. Voluntary measures are as effective as government mandates, without the downsides of regulation.

How Effective Are Gender Quotas on Corporate Boards?

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