Board Diversity and Shareholder Voting

Abstract

The lack of board diversity across gender and race has been one of the most controversial topics in corporate board governance in recent years. Given the central role that shareholders have in approving director appointments, we investigate whether shareholders value diversity on corporate boards by analyzing their voting patterns in director elections. Despite many shareholders’ public commitments of supporting board diversity, we show that shareholders have not historically been proactive in using their votes to motivate companies to increase diversity among corporate boards. This finding persists over time and across key shareholders who have been some of the most outspoken proponents of board diversity.

Keywords: Board of directors; Diversity; Shareholder voting; Environmental, Social, and Governance (ESG)

JEL Classification: G30, G34, G23, M14, J71