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Board diversity and shareholder voting

Author

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  • Gow, Ian D.
  • Larcker, David F.
  • Watts, Edward M.

Abstract

The lack of diversity across gender and race of corporate boards has been one of the most significant issues in corporate board governance in recent years. Given the critical role that shareholders have in approving director appointments, we analyze voting patterns in director elections to investigate whether and how shareholders value board diversity. Using a broad sample of director elections from 2008 through 2018, we find evidence that shareholders provide greater voting support for diversity on boards, particularly gender diversity. Our findings also indicate greater additional support for diverse boards rather than for individual candidates. However, the magnitude of incremental voting support for diversity is small, and we find little evidence that the additional support is sufficient to affect voting outcomes. These findings persist over time and across key institutional shareholders who have been some of the most outspoken proponents of board diversity (i.e., SRI funds), questioning shareholders’ commitment to promoting board diversity.

Suggested Citation

  • Gow, Ian D. & Larcker, David F. & Watts, Edward M., 2023. "Board diversity and shareholder voting," Journal of Corporate Finance, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:corfin:v:83:y:2023:i:c:s0929119923001360
    DOI: 10.1016/j.jcorpfin.2023.102487
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    More about this item

    Keywords

    Board of directors; Diversity; Shareholder voting; Environmental; Social and Governance (ESG);
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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