What Are the Expected Results of California Board Quotas?

Beginning in 2019, California is set toimplement a new law that requires companies fill around 40 percent of corporate board positions with women.[1]  This means California is following the lead of european countries including Norway, Belgium, France, Germany, Iceland, Italy, and Spain which have legislated similar reforms for corporate boards.The California mandate may face federal and state legal challenges. However, assuming the law is implemented, observers will no doubt be interested to see whether it accomplishes its objectives. For example, will the law improve corporate leadership representation for women?A study published today inThe Review of Economic Studies sheds light on possible outcomes of California ’s policy. The study reviews the effects of Norway’s 2003 reform which similarly requires companies fill 40 percent of corporate board positions with female directors, or be dissolved. As the study recounts,“In theory, quotas can be an effective tool to improve gender equality… Because qualified women might be harmed by an absence of networks to help them climb the corporate ladder, quotas can provide the initial step up that women need to break this cycle. If discrimination is the key factor for t he under-representation of women, quotas might help overcome business prejudice (and improve efficiency) by forcing more exposure to talented women in positions of power (Beaman et al 2009, Rao 2013).”But rather than finding quotas improved corporate leadersh...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs