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39 Del. J. Corp. L. 377 (2014-2015)
Diversity on Corporate Boards: How Much Difference Does Difference Make

handle is hein.journals/decor39 and id is 389 raw text is: DIVERSITY ON CORPORATE BOARDS: HOW MUCH DIFFERENCE DOES DIFFERENCE MAKE? BY DEBORAH L. RHODE & AMANDA K. PACKEL ABSTRACT This article seeks to evaluate the case for racial, ethnic, and gender diversity on corporate boards of directors in light of competing research findings. The analysis provides a comprehensive overview of recent studies on board diversity and explores whether diversity has been shown to improve corporate financial performance, reputation, governance, and board decision making. After exploring the strengths and limitations of various methodological approaches and survey findings, the article concludes that the relationship between diversity and financial performance has not been convincingly established. The review does, however, find some theoretical and empirical basis for believing that when diversity is well managed, it can improve decision making and can enhance a corporation's public image by conveying commitments to equal opportunity and inclusion. To achieve such benefits, diversity must ultimately extend beyond tokenism, and corporations must be held more accountable for their progress. Discussion also focuses on the barriers to achieving diversity and suggests strategies for boards, policy makers, institutional investors, and corporate social responsibility organizations to promote more inclusive boards. TABLE OF CONTENTS I. IN TRO D UCTION .................................................................................. 378 II. THE CURRENT STATE OF DIVERSITY ON CORPORATE BOARDS ....... 379 A. Female and Minority Representation on Corporate Boards ....... 379 B . Progress or Plateau? ................................................................... 380 III. THE CASE FOR DIVERSITY ON CORPORATE BOARDS ...................... 382 A. Diversity and Firm Performance ................................................. 383 1. Studies Finding a Positive Relationship ................................... 384 Rhode is the Director of the Stanford Center on the Legal Profession and the Ernest W. McFarland Professor of Law at Stanford. Packcl is the Deputy Director of the Rock Center for Corporate Governance at Stanford. The research assistance of Stanford Law students Erin Mohan and Robert Harrington, and the comments of Frank Dobbin, Joseph Grundfest, and Aaron Dhir, are gratefully acknowledged.

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