When Does Board Diversity Benefit Firms?
56 Pages Posted: 12 Sep 2018
Date Written: August 29, 2018
Firms embrace diversity, especially with regard to sex. Overtly optimistic predictions of a diversity dividend, some built on sex stereotypes, lead these firms to count on profits that may never materialize. This Article attempts to reset the agenda on how to study corporate board diversity. We can only assess if and how sex diversity yields benefits by understanding the who, what, and where of diversity. Whether sex diversity produces a “diversity dividend” depends on three key factors: (1) the nature of the benefit of including women (whether for their experience or other qualities); (2) the kind of firm and its governance; and (3) the jurisdiction(s) in which the firm operates. Only by further investigating the precise conditions under which diversity will have an effect can we estimate the potential instrumental benefits of sex diversity.
Keywords: corporate governance, corporate boards, diversity, sex equality
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