Government Intervention into Board Composition: Gender Quotas in Norway and Diversity Disclosures in the United States

In recent years, regulators have introduced gender diversity quota laws and dis-closure-based approaches to increase the representation of women on corporate boards. These developments have set off a global discussion about the importance of diversity in the boardroom and what role governments should play in promoting it. Despite much recent debate, there is little information about how regulatory approaches intended to increase women’s representation on corporate boards operate in practice. Professor Aaron Dhir’s [2015] book, Challenging Boardroom Homogeneity: Corporate Law, Governance, and Diversity, provides essential insights from two studies that significantly enhance our understanding of the practical impact and potential limitations of quotas and disclosure rules in the board diversity context. This Article summarizes Dhir’s findings from interviews with directors about their experiences under Norway’s gender quota regime and discusses some limitations that may affect the translation of his findings to other settings. Dhir’s research suggests that quotas have gained acceptance in Norwegian corporate culture, have changed the dynamics of the board in positive ways, and have enhanced corporate governance. This Article then reviews Dhir’s study of the first four years of proxy statements of Standard & Poors (S&P) 100 firms following the passage of the SEC’s board diversity disclosure rule. Dhir’s analysis reveals that corporations tend to define diversity in terms of experience rather than demographics. Based on his findings, Dhir proposes that the SEC strengthen the U.S. disclosure rule by requiring companies to disclose whether they consider demographic diversity and by adopting a stronger, more prescriptive comply-or-explain approach. Dhir’s research provides a convincing basis for adopting some of his suggested revisions to the rule within a traditional disclosure model.

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