Diversity on boards means more than gender

More on corporate board director diversity (or lack thereof) by Anita Anand and Vijay Jog (see earlier post Women gain on corporate boards but visible minority representation dips):

In light of these arguments in favour of board diversity and given the ever changing mix of the Canadian population in general, one might think visible minority directors would be more present on Canadian corporate boards. But this is not the case. We have found they represent 5.5 per cent of directors of TSX-listed firms (and less if certain foreign-owned firms are excluded). Visible minorities represent only 4.2 per cent of those graduating from director-education programs, some of whom have previous board experience as an admission requirement.

The percentage of women is much higher in both cohorts; white women comprise 26 per cent of graduates of director programs but only 12 per cent of public company board members. Thus corporate boards have much fewer visible minority directors relative to both white women and white men.

But does diversity even matter? Prior academic research has been somewhat inconclusive. We find that firms with white male boards do not show significantly better performance than firms with boards comprised of females and visible minorities. We do not claim that these results show causality since it is possible that firms that demonstrate superior stock performance are forward-thinking or that investors respond positively to such proactive measures. At the very least, our results suggest that there is no performance deterioration by having a diverse board.

Visible minorities contribute significantly to GDP and represent a high growth segment of the population. Let’s open up the conversation about board diversity beyond gender parity and consider whether boards should bear some demographic similarity to the society in which the corporation operates. Corporate Canada will need to face this issue at some point: why not now?

Diversity on boards means more than gender | Toronto Star.