Essay on "Board Diversity and Firm Performance: How Legislative"
Essay 4 pages (1100 words) Sources: 4
[EXCERPT] . . . .
Board Diversity and Firm Performance: How Legislative Requirements Might Help Boost EarningsJust under a decade ago, Norway made headlines by passing a law that required all public limited companies (PLCs) had boards made up of at least forty percent female members, in an effort to establish greater gender equality in business. The law was and is seen as controversial by many despite the fact that other countries have since passed highly similar laws, and the question of whether or not diversity in organizations -- and especially in their leadership teams -- is something that should be legislated remains a hot topic amongst individuals in the business world and amongst policy makers in countries around the globe. The following pages examine certain practical implications of this type of legislation.
The Impact of Diversity
There are, of course, ethical considerations that must be taken into account in any full and fair investigation of the issue of board diversity. Norway's law requiring greater levels of female representation and inclusion in the upper echelons of the business world would not have been seen as required and would certainly not have been implemented if the proportion of female board members more closely matched the proportion of females in the wider population -- i.e. about half -- and equal opportunity is generally seen as an inherent ethical right in democratic societies. Others contend that boards are selected to promote value, and that restrictions on the freedom of any company and its shareholders to select the most advantageous board is itself an ethical violation.
These issues are certainly worthy of consid
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The evidence of a positive practical impact from Norway's law is mixed at best, though some firms definitely seem to have benefited from the mandated inclusion of a higher proportion of females on their boards (Nygaard, 2011). According to Nygaard (2011), the immediate benefits to companies was mediated by another factor, namely the degree to which internal and external information regarding the company were in agreement. This was due to investor anticipation and confidence in the firms' ability to effectively incorporate and utilize the new board demographics, which was raised in companies with low information asymmetry and negligibly reduced in firms with high information asymmetry (Nygaard, 2011). Diversity requires more in order to lead to benefits, according to this research.
Other researchers assert that a more definite negative impact can be seen as a result of the Norwegian law, noting that the law tended to lead to… READ MORE
Quoted Instructions for "Board Diversity and Firm Performance: How Legislative" Assignment:
**topic:
In 2003, the Norwegian Government created a law stipulating that at least 40% of board members of public limited companies (PLCs) must be female. As similar laws have been proposed in other countries, evaluate the effect of this law on firm value.
In particular, focus on the channels through which more general (i.e. non-gender) characteristics of board composition affect firm performance.
**provided papers:
Ahern and Dittmar (2011, forthcoming QJE). The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation.
Nygaard (2011). Forced Board Changes: Evidence from Norway.
- Please mark the exact quotations which are used in the writing that where are they from(which sources are they from)
Best regards,
Thatchapon W. *****
*****
How to Reference "Board Diversity and Firm Performance: How Legislative" Essay in a Bibliography
“Board Diversity and Firm Performance: How Legislative.” A1-TermPaper.com, 2012, https://www.a1-termpaper.com/topics/essay/board-diversity-firm-performance/3281092. Accessed 5 Oct 2024.
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