The Norwegian Gender Balance Law. A Reform That Failed?

92 Pages Posted: 26 Feb 2019

See all articles by R. Øystein Strøm

R. Øystein Strøm

OsloMet - Oslo Metropolitan University

Date Written: December 10, 2018

Abstract

The Norwegian Gender Balance Law (GBL) was proposed in June 14th 2003, made into a law on December 9th 2005, and implemented from January 1st 2006 with a two-year grace period. The law mandates at least 40% board representation for both gender in PLC companies. The government gave two main promises, one that gender equality would increase with the law, the other that companies' financial performance would improve. I review research literature and add descriptive long-term developments on these dimensions. This essay concludes that the promises were not fulfilled, and that the corporate governance consequences that did follow are mostly negative. Companies attain the 40% female director target, but besides this, the law does not bring more female managers or CEOs, and the gender segregated labour market remains segregated. Today, the law applies to about 500 women, half of the number at its maximum. An unintended consequence of the legislation is the mass exodus of companies from the PLC register. I find it difficult to compare results from research on financial performance. Researchers perform before-and-after study, a natural experiment, but the reform has a long gestation period and attrition of companies from the PLC register. I conclude that the law should be repealed. In a wider context the experiment casts doubt as to the usefulness of legislation to promote gender equality in the boardroom and in society at large.

Keywords: Female Directors, Mandatory Quota, Board Reform, Regulation

JEL Classification: G34, G38

Suggested Citation

Strøm, Reidar Øystein, The Norwegian Gender Balance Law. A Reform That Failed? (December 10, 2018). Available at SSRN: https://ssrn.com/abstract=3331791 or http://dx.doi.org/10.2139/ssrn.3331791

Reidar Øystein Strøm (Contact Author)

OsloMet - Oslo Metropolitan University ( email )

P.O. Box 4
Oslo, 0130
Norway
+47 97968500 (Phone)

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