Women on boards: Should quotas be imposed?

India Infoline News Service | Mumbai |

There is evidence that the presence of women on boards correlates to greater shareholder value, raised educational levels among board members and greater attendance at meetings.

In a recent article published in the 2013 annual report of the Swedish Corporate Governance Board, Karin Thorburn, a visiting and former professor at the Tuck School of Business at Dartmouth, and finance professor at the Norwegian School of Economics, assures that the presence of women on boards leads to greater shareholder value and advocates a quota system such as the one currently used in Norway.

Women now receive more than 40 percent of global MBAs and law degrees—yet when it comes to corporate boards, they’re still on the wrong side of the glass ceiling, looking up. Fairness aside, does the presence of women on boards improve corporate performance? Research on the subject has been inconclusive, says Thorburn. There is evidence however that the presence of women on boards correlates to greater shareholder value, raised educational levels among board members and greater attendance at meetings.

In Norway, a quota experiment began in 2008 which forced companies to include certain levels of women as board members, after voluntary targets failed to be reached. Under threat of dissolution by the government, corporations increased the share of women to 42 percent. In countries where the courts have ruled that such quota systems are unconstitutional, a greater presence of women on large-company boards demonstrates however that  firms have bought into the idea of diversity, or at least want to be seen as diverse.

Thorburn still believes regulations would aid in helping to break the metaphorical ceiling: “We would have seen little change without legal action.”
 

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