The Morals of the Women on Boards Story: Global Board Gender Diversity Efforts Still Need Fairness-Based Arguments to Move Regulation to the Next Chapter

The number of women on boards of public companies in the United States and Canada is still staggeringly low despite the fact that both of these jurisdictions have implemented disclosure-based regulation relating to board diversity. Typically, arguments in support of regulation aimed at increasing women's participation on public boards fall into two categories: the business case and the fairness-based (or normative) case. The business case is essentially the idea that women bring some instrumental benefit to the board which leads to improvements in firm functioning or performance overall. While politically attractive, the business case for justifying regulation has yet to convince most of those in the business community in Canada and the U.S. If it had, we would have seen a much greater transformation in board composition in recent years than we have seen. The normative case, which is the idea that women deserve board seats because this is morally right, is less politically attractive because it is often seen to clash with the view, particularly in the U.S., that the role of corporations-and by implication the boards that manage them-is to maximize shareholder wealth.This article uses the Canadian and American experiences to argue:(1) that the normative case, by itself and in combination with the business case, can justify stronger regulation encouraging greater female participation on boards, especially given the role of the board and the involvement of institutional investors; and(2) that securities regulators in each jurisdiction have a critical and appropriate role to play in increasing board diversity.This article provides an overview of various jurisdictions' regulatory regimes aimed at increasing board diversity and the respective increases of female participation on public boards. It goes on to outline the normative case and provides an analysis of the popular critiques and responses thereto. Also included is a description of the business case and its acknowledged weaknesses. Finally, it argues that normative-based rationales for implementing regulation aimed at enhancing gender diversity on public boards justify action by the SEC in the U.S. and provincial securities regulators in Canada, recognizing, however, that it is important for these capital market regulators to stay within the boundaries of their respective mandates and ensure that regulation does not harm the interests of investors or damage capital markets.

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