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Toward Gender Diversity on Corporate Boards: Evaluating Government Quotas (Eu) Versus Shareholder Resolutions (Us) from the Perspective of Third Wave Feminism

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Abstract

In recent years, the US and the EU have pursued markedly different agendas in the pursuit of board gender diversity. The EU has taken a more pro-active governmental approach of mandated quotas, whereas the US is relying largely on the endogenous mechanism of shareholder diversity proposals. Despite their obvious allure as a means of bringing about rapid change, evidence is mounting that board gender diversity quotas may yield various deleterious side effects; and quotas may not be as successful in their core aim of promoting gender diversity as initial broad statistical measures indicate. In this paper we critique the expanding EU quota regime, and consider US shareholder proposals as an alternative change mechanism for improving gender diversity in corporate boards. As an alternative to quotas, diversity resolutions are often dismissed as ineffective because the vast majority fail to formally pass (with a failure rate close to 95%). However, on closer inspection, this ‘failure’ actually results in success. Contrary to the conventional ‘folk’ wisdom -- in the quest to promote gender diversity on corporate boards, the endogenous (US) mechanism of board diversity proposals has, to date, resulted in similar increases in gender diversity as the exogenous (EU) mechanism of government-mandated gender quotas. Furthermore, the former mechanism is more consistent with recent ‘third-wave’ feminist theory. We conclude with the policy recommendation that, rather than quotas, the EU should focus on removing the regulatory barriers that inhibit shareholder democracy.

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Notes

  1. Although the UK is still currently part of the EU, UK regulatory authorities have expressed reluctance to follow the gender quota route. Instead, the UK is pursuing a voluntary business led approach, which so far appears to have been successful at increasing female participation on boards (UK Govt 2015).

  2. In November of 2013 the EU Parliament voted to legislate a mandatory 40% gender quota across all public companies listed on exchanges of member states, to become effective in 2020.

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  1. Department of Finance, Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA, 93407, USA

    John Dobson, Denise Hensley & Mahdi Rastad

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  1. John Dobson
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Dobson, J., Hensley, D. & Rastad, M. Toward Gender Diversity on Corporate Boards: Evaluating Government Quotas (Eu) Versus Shareholder Resolutions (Us) from the Perspective of Third Wave Feminism. Philosophy of Management 17, 333–351 (2018). https://doi.org/10.1007/s40926-017-0077-7

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