No More Old Boys’ Club: Institutional Investors’ Fiduciary Duty to Advance Board Gender Diversity

68 Pages Posted: 21 Nov 2019 Last revised: 9 Nov 2021

See all articles by Anat Alon-Beck

Anat Alon-Beck

Case Western Reserve University School of Law

Michal Agmon-Gonnen

District Court of Tel Aviv - Commercial Department I; Tel Aviv University - Buchmann Faculty of Law

Darren Rosenblum

McGill University Faculty of law; Pace Law School; University of California, Berkeley - Berkeley Center on Comparative Equality & Anti-Discrimination Law

Date Written: 2021

Abstract

As the benefits of gender equality for governance become more apparent, boardroom diversity initiatives abound. At the same time, institutional investors play an increasingly central role in the corporate world. This Article takes a novel approach to achieve this necessary change. Institutional investors already oversee firm leadership quite closely. This Article suggests that institutional investors hold a fiduciary duty to ensure there is gender diversity in leadership. As objections to state mandates persist, institutional investors can bring the benefits of private ordering to play a central role in ensuring equality.

Institutional investors play a dominant role over firms as principal shareholders. With that power comes responsibility. As stewards to their beneficiaries and the companies in which they invest, institutional investors could have a fiduciary duty to observe and encourage equality for women in the boardroom. Such investors, by virtue of their influence, can foster a marked improvement in gender equality. This Article analyzes the role fiduciary duties play for institutional investors and how diversification should figure as central among them.


Keywords: diversity, fiduciary duty, corporate law, gender

JEL Classification: K22

Suggested Citation

Alon-Beck, Anat and Agmon-Gonnen, Michal and Rosenblum, Darren, No More Old Boys’ Club: Institutional Investors’ Fiduciary Duty to Advance Board Gender Diversity (2021). 55 UC Davis Law Review 102 (2021), Case Legal Studies Research Paper 2019-22, Available at SSRN: https://ssrn.com/abstract=3489927

Anat Alon-Beck (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
2163683311 (Phone)

Michal Agmon-Gonnen

District Court of Tel Aviv - Commercial Department I

Tel Aviv
Israel

Tel Aviv University - Buchmann Faculty of Law

Ramat Aviv
Tel Aviv 69978
Israel

Darren Rosenblum

McGill University Faculty of law ( email )

3644 Peel Street
Montreal, Quebec H3A 1W9
Canada

Pace Law School ( email )

78 North Broadway
White Plains, NY 10603
United States
914 422 4663 (Phone)

University of California, Berkeley - Berkeley Center on Comparative Equality & Anti-Discrimination Law

Boalt Hall
Berkeley, CA 94720-7200
United States

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