What Drives Racial Diversity on U.S. Corporate Boards? Mandates or Movements

Abstract

We document racial disparities in the U.S. corporate director labor market. Through 2019, the underrepresented minority (URM) share of new directorships was significantly lower than their representation in the managerial workforce. After 2020, shifts in appointment behavior coincided with the acceleration of the racial justice movement, passage of the California board diversity law, and implementation of the Nasdaq board diversity rule. Black director appointments increased 185% following George Floyd’s murder, and the California and Nasdaq mandates increased minority director appointments from groups not traditionally underrepresented. Our analysis is suggestive of search frictions, inattention, and racial bias causing these racial disparities.

Keywords: board diversity, board of directors, quotas, mandates, racial bias

JEL Classification: G34, J71