Board Diversity and Corporate Governance

The global financial crisis has led to demands for greater transparency in corporate practices. But less attention has been paid to whom the players should be in this new environment. Corporate boards across the world generally have a predominance of male directors. Research shows a lack of diversity in terms of gender, race/ethnicity and international expertise at a time when “global” defines the business climate.

How can corporate boards become more reflective of stakeholders that have become more diverse in terms of consumers, workers, communities and shareholders? Is it desirable to change boards’ composition? If such changes are to proceed, by what methods should they be implemented? There are a variety of possibilities, including legislated mandates or quotas for women directors; Corporate Governance Commissions and Stock Exchange requirements on board diversity; and institutional shareholders pushing to nominate and create their own database of diverse directors.

Which of these possibilities, if any, are worth putting into practice and where? How are these measures expected to affect companies’ profitability? How could board diversity be accelerated without legislative mandates? Which measures can be expected to result in more women in senior management? If such changes are made, what impact, if any, will they have on corporate governance?