Board Diversity Is Sacrificed When Companies Underperform

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Underperforming companies are more likely to experience a decrease in racial and gender diversity on their boards, a study found

ompanies that are underperforming in comparison to their competitors or to their goals are more likely to experience a decrease in racial and gender diversity rates on their boards, a newly releasedResearchers at Imperial College Business School in London tracked data from more than 700 U.S. firms from 1996 to 2013 to make the assessment.

“The board deliberately seeks new expertise and new perspectives among a variety of industries and backgrounds in the belief that it might rescue the company. But while this expertise came from a range of sectors, that’s as far as the diversity goes, in terms of race and gender,” Jung says. In 2021, women comprised just 27% of board seats among the 3,000 largest publicly traded companies incorporated in the U.S., and only 6% of those seats were held by women of color, according to a

Some countries in Europe have safeguards in place that would prevent progress on board diversity being rolled back. Gender diversity quotas are common in nations like France, Norway, Spain and Iceland, where women must make up at least 40% of boards at publicly traded companies, according to theWhile research about the benefits of gender-based diversity in the U.S.

 

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