Diversity on Corporate Boards: Limits of the Business Case and the Connection between Supporting Rationales and the Appropriate Response of the Law
Year: 2011
Type: article
Abstract: Some observers suggest that diversity on corporate boards of directors will lead to new perspectives and hence better decision making by the board.It would seem to follow that improved decision making will lead to better corporate performance and thus presents a "business case" for increasing diversity on corporate boards.This Commentary explores the limits of the business case, some of the alternative rationales for increasing diversity on corporate boards, and the extent to which those rationales provide a basis for the law mandating or encouraging increased diversity.This Commentary concludes that the recently adopted SEC rule mandating disclosure of any policies relating to the role of diversity in board selection is a measured response to the current rationales, although it could have gone a bit further.Although the current rationales for increased diversity do not provide a clear mandate for more proactive government intervention, these rationales clearly support some form of regulatory intervention.For a considerable period of time, the primary argument in favor of increasing the diversity of corporate boards was that it would result in more successful companies.! As noted above, this is referred to as the business case.In her most recent article, Professor Lisa Fairfax aptly points out that the business case for diversity on corporate *
Author: Thomas Lee Hazen
Language: English
Subfield: Gender Studies
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3125927942