Quotas for Women on Corporate Boards: The Call for Change in Europe

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Chapter 2.4. Who is afraid of women on boards:
Undoubtedly, the drive for more women on boards is coloured by a number of negative opinions. Amongst the most cited arguments against larger gender diversity on boards, particularly against quota imposition, is the view that if companies are legally forced to hire more women, it is highly probable that they will compromise the skills and experience of the directors. However, this assertion can be easily rebutted by exploring the number and experience of women who are eligible for appointment as board directors. Recent research shows that their number has significantly increased in the recent years, as more and more women complete advance academic degrees and gain experience in the corporate world.
The results from exploring the correlation between female's participation on boards and firm's performance are so far inconclusive. Although a number of surveys show positive interdependence, particularly in the return on investments and the return on assets, the empirical evidence is mixed. In their study Adams and Ferreira conclude, for example, that a beneficial link between gender diversity and company performance exists, yet it is distinguishable only in the cases when corporations suffer from weak corporate governance practices. On the contrary, they claim that within companies with well - established mechanisms over-monitoring could lead to a decrease of shareholders value. Similarly, Ahern and Dittmar, when using Tobin's Q test, suggest that biases from hiring more female directors could indeed bring about negative tendencies in the stock price of the companies.
One possible explanation for the lack of consistent outcome of the studies on firm performance might be the fact that the favourable impact of more women on boards has several dimensions. Moreover, it seems that the large interdependence between gender diversity and firm performance could differ by country and legal and corporate tradition.

Irina Velkova is a Corporate lawyer who examines Corporate Governance topics and issues related to Gender Diversity. Currently she works within the financial regulation advisory department of Grant Thornton LLP, UK. Prior to this, Irina Velkova has served as a Chief of Staff to the Deputy Prime Minister and Minister of Finance of Bulgaria. In that capacity, she gained extensive practical Corporate Governance expertise and experience.
She obtained her LLM Degree from University College London and is also awarded with a Diploma in English and European Law from the University of Cambridge.