The Faculty Lounge

ABA Seeks Comments On Proposed Law School Rule Revisions

The ABA Section of Legal Education and Admissions to the Bar has posted a Notice and Comment for proposed changes to the ABA Standards and Rules of Procedure for Approval of Law Schools.  Details are here.

Call For Ideas: Teaching Practical Skills In 1L Classes

This just in from the AALS Section on Teaching Methods:

The AALS Section on Teaching Methods is building its 2015 newsletter around your creativity and innovation for introducing practical skills and knowledge into first-year law school classrooms around the country.

Our Goal - Our hope is to create a forum that inspires each of us to share our ideas, borrow those of others, and ultimately reinvigorate and improve our teaching and our students' learning.

Our Ask - Using the form available at

http://goo.gl/forms/n8nGp4v3ob, please submit by April 15 a very brief summary (no more than 280 characters--or two tweets!) of an idea you have executed (or are thinking about executing) for teaching practical skills or knowledge in a first-year law school course (e.g., contracts, torts, property, criminal law, procedure, writing).

By submitting an idea, you give the Section on Teaching Methods permission to reprint your submission, along with your submitted name and affiliation, in our 2015 newsletter.

Our Followup - The Section may reach out to the authors of a handful of submissions to write a brief article that provides more detail regarding the teaching idea submitted.

What’s The Return On Equality: Taking Stock of Day 1

In this post, I’m going to put on my moderator hat in order to tease out some common themes and differences across today’s posts and to press the contributors (including me) to elaborate on or defend some of their statements and assumptions. 

Let me start, first, with the elephant in the room of board quotas.  As Aaron’s posts make clear, this is an approach followed by many countries, but not the US, which has, not surprisingly, opted instead for a disclosure regime.  Darren also writes about quotas, so he’s given this some thought as well.  And in the comments, Lisa asks whether the potential for popular backlash against quotas in the US would be so strong as to make them counterproductive.

So, I’d like to invite all of our guest bloggers to engage the quota question more directly, as well as ask a pointed question – what purpose do you expect quotas to serve?  Lisa notes that board diversity is an end in itself that provides social and other benefits. And if that is the rationale, then I suppose we need look no further. Indeed, one thing I have noticed about board diversity debates in other countries is that these social benefits of board diversity (it provides opportunities for women and minorities, it counteracts unconscious or other bias, it provides diverse role models, etc) are often front and center in the discussion. 

In the US, however, that is not the case.  Board diversity efforts in the US are nearly always supported with a “diversity is good for business” rationale. Our respondents, for example, uniformly adopt some version of the “good for business” justification, and only rarely, if ever, invoke social, ethical, or fairness justifications. 

The ubiquity of the business rationale is especially interesting in light of the empirical research on diversity’s effects on the bottom line.  I should note here that I am substantially more skeptical than either Aaron or Lisa about diversity’s bottom-line benefits in the boardroom, which in my view are unproven under most conditions and in some cases are contradicted by existing quantitative research showing that board quotas reduce profitability. 

So, to my fellow board diversity bloggers: what is your basis for concluding that board diversity is good for business?  Or am I misinterpreting your statements? Aaron mentions empirical support for diversity’s boardroom effects in terms of “decision-making and overall firm governance,” so perhaps he can elaborate on that. Lisa, while somewhat more agnostic, does link to the wildly popular Catalyst studies showing correlations between diversity and performance, presumably implying that such correlations mean something. 

Which brings me to Daria’s comments about method, which I will engage more fully in a separate post. But, in short, I think the ethnographic method is perfectly suited to the question we seek to engage, which is -- given the lack of empirical support for diversity’s effects on shareholder value – how do directors themselves explain the “diversity enterprise?”   

Whether or not their lack of a coherent story is surprising (Daria thinks not, John disagrees, I’m sort of agnostic) it is quite telling.  And to me, the story it tells is one in which the business case is ultimately irrelevant to the quest for diversity in the boardroom, though that is not what anyone says.  And that, I think, is a very interesting story. 

 

The “What’s The Return On Equality?” Mini-Symposium:

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

What’s The Return on Equality: Aaron Dhir On Disclosure

The following post is from Aaron:

In my previous post, I discussed the first of the two main regulatory models designed to address diversity in the boardroom—quotas.  In this post, I turn my attention to the United States’ experiment with diversity disclosure.

The statistics on gender representation at the highest levels of U.S. corporations paint a bleak picture. Women hold slightly less than 18 percent of Fortune 1,000 board seats.  Since 2010, the Securities and Exchange Commission has required publicly traded firms to report on whether they consider “diversity” in identifying director nominees and, if so, how.  But here is the catch:  the agency refused to define “diversity” in its rule, leaving it to corporations to give the term meaning.

So what does “diversity” mean to corporate America?  In my new book, Challenging Boardroom Homogeneity (Cambridge University Press, April 2015), I analyze the disclosures that the S&P 100 submitted to the SEC from 2010 to 2013 to shed empirical light on this question.  My findings are striking and will not provide those concerned with equality with much reason for optimism.

Over the four years of my study, virtually all companies complied with the rule by disclosing that they do in fact consider diversity when appointing their boards.  However, only approximately half defined diversity in terms of gender, race, or ethnicity.  Most firms, when defining diversity without regulatory guidance, refer to a director’s prior experience, rather than his or her socio-demographic characteristics. 

Take, for example, Ford Motor Company.  Only two of its sixteen directors are women. From 2010 to 2013, the company provided the same disclosure:  “Ford recognizes the value of diversity and we endeavor to have a diverse Board, with experience in business, government, education and technology, and in areas that are relevant to the Company's global activities.”  Even perfunctory reporting can easily fulfill a firm’s legal obligations under the SEC rule.  Berkshire Hathaway’s disclosures provide a case in point:  “Berkshire does not have a policy regarding the consideration of diversity in identifying nominees for director.  In identifying director nominees, the…Committee does not seek diversity, however defined.”  Insolent?  Perhaps.  But perfectly permissible under the rule. 

Last Fall, speaking at a conference in Washington, D.C., SEC Chair Mary Jo White acknowledged that an air of disappointment surrounds the corporate disclosures submitted under the rule thus far.  Her proposed solution?  Investors and other stakeholders must “make it known that…they want more information on what is being done to promote diversity” and firms must “work harder to identify qualified women to serve on boards.”

Chair White is undoubtedly correct.  Investors and civil society groups must continue to press corporations to address diversity, and firms must expand their searches for board nominees.  By placing the responsibility on the shoulders of these parties, however, she glosses over the SEC’s role in the disappointing performance of the rule.

Many commentators who supported the SEC’s original rule proposal made it clear that they were concerned with “diversity” along gender and racial lines.  But the Commission ultimately left it to firms to construe the term as they wished.  If corporate America’s disclosures are disappointing, then the design of the rule is to blame.

A rule that provides this much flexibility gives corporations no incentive to pursue socio-demographic diversity.  In fact, it may make the situation worse.  How?  In reporting under the rule, companies have demonstrated that they do take some form of diversity into account.  This puts them in a state of legal compliance, which may give them a sort of “moral cover.”  Having played by the rules and checked the appropriate boxes, corporations have little incentive to go a step further and pursue socio-demographic diversity.  Indeed, my study shows that there has been very little change in the content of firms’ disclosures.  For the vast majority, the disclosures contained the same information year after year.

In her remarks, Chair White laid out her own personal conception of boardroom diversity:  “when I speak of boardroom diversity, I mean more than just diversity of professional experience, industry expertise and education.  I mean real gender and minority diversity, which brings with it a richness and variety of experiences and perspectives.” 

Chair White has a point.  Various studies, including my own, suggest that gender diversity – for a complex set of reasons – may have a positive effect on boardroom decision-making and overall firm governance.  What is more, the corporation is a place of significant power in today’s world.  Many companies have nearly as much influence over economic and social relations as government, and women and members of racial and ethnic minority groups ought to be a part of their leadership structures.

In my book, I argue that the SEC should abandon its agnosticism and define diversity as including factors such as gender, race, and ethnicity, thus requiring corporations to consider the socio-demographic composition of their boards.  The Commission should also consider adopting a so-called ‘comply-or-explain’ approach to diversity disclosure.  Requiring companies to either comply with a rule that they consider socio-demographic diversity in composing their boards (and follow other prescribed diversity-related practices) or explain their decision not to do so would nudge corporations with a bit more force than the pure disclosure model currently in effect.  This approach, if adopted, should be coupled with targeted reviews of issuers’ filings.

If well designed, a disclosure regime can yield important benefits.  But it may be ineffective if it gives the regulated entity too much discretion.  If we are to move toward more inclusive corporate boardrooms, the SEC must rethink its rule and the current proxy season is an opportune time.

 

The “What’s The Return On Equality?” Mini-Symposium:

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

License Plates: Public Forum or Government Speech

The Supreme Court heard oral argument today in Walker v. Texas Division, Sons of Confederate Veterans.  Texas permits a wide variety of specialty license plates, emblazoned with various messages (from affinity with a university to endorsement of causes) but refused to allow the Sons of Confederate Veterans to have a plate with the Confederate battle flag on it.  Texas's Solicitor General ran into trouble with his contention that the specialty plates are government speech, immune from First Amendment scrutiny.  (Lyle Denniston's summary of the argument is here.) Let's assume specialty plates are a public forum, perhaps a limited public forum, the limitation being refusal to issue plates bearing a message that can constitutionally be proscribed (e.g., obscenity, fighting words).  That was pretty much what counsel for the SCV argued, even asserting that if a group wanted a plate with a Nazi swastika, or promoted jihad, or illegal drug use, the state could not refuse to issue the plate.  I'm not going to predict the outcome (though I do think specialty plates are a species of public fora) but I am willing to predict a consequence if the Court should adopt the SCV's counsel's assertion:  States will stop issuing specialty plates, especially if obnoxious requests of the sort posited become commonplace.  And I don't think there is any constitutional objection to that action.  Public forums can be terminated. 

What’s The Return On Equality: Daria Roithmayr

Daria Roithmayr is the George T. and Harriet E. Pfleger Chair in Law at USC Gould School of Law. Daria teaches and writes about the dynamics of law and social systems, focusing on the way that legal regulation and social behavior evolve in response to each other. Her recent book, Reproducing Racism: How Everyday Choices Lock In White Advantage (NYU 2014), explores the self-reinforcing dynamics of persistent racial inequality.

 

Daria’s post is below.

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Hi Kim.  Thanks to you and Darren for putting this wonderful symposium together. 

I want to talk in my post about limits. Reflecting on all our work, I continue to be struck by the idea that our method is too limited to do much more than what we’ve already done.  As insightful as board members might be, survey work is just too crude an instrument for us to be able to get much qualitative insight. Board members might be expert on corporate decision-making, but they are far from expert on the potential substantive effect of gender on corporate decision-making.

So I am not at all surprised that, unprompted, in an open-ended interview, the board members in your study thought that gender did make a difference but were unable to come up with much in the way of examples. They are in no position to understand the way in which gender might matter or what other things women might bring to the table beyond their gender.  And they are limited in what they can say about a counterfactual, though members with a lot of history might have some point of comparison. 

I’m not saying that they have no insight.  Certainly in our interviews as well as Aaron's, we have heard board members say similar things about the effect that women have on process. Some of these observations are grounded in real observation, no doubt.  But in many of those interviews, I also hear echoes of stereotype: women are less sure of the evidence and ask more questions, or women are less risk-prone. In the French case, some of these stereotypes were more blatant than others.

In addition, to the extent that these observations are true, board members are hard pressed to tell us whether it is because the newcomers are outsiders (as French board members report) or because they are women (as the Norwegians report) or both! However insightful board members might be, they are just in no position to reflect on whether women make a substantive difference.

We can help them in that regard. We can (and do) prompt them with potential possibilities to give them the benefit of expert insight. But at the end of the day, even with regard to our results on the French quota, I don’t trust their observations to do more than raise questions we ought to study further.  Their memories are unreliable, their observations affected by their own gender ideologies, and they wouldn't know how to pinpoint or describe the cause of what they were observing in any event. In short, we can't expect them to do the sociological or social psych research in our place.  And of course, we can't do the work ourselves, because of the closed-door nature of corporate boards.

I continue to wonder whether some young start-up corporate board might be enticed to allow an observer to study them, with the promise of improving their decision-making, much as organizational psychologist consultants do for management decision making for many companies. I also wonder whether experiments might lend additional insight. 

In sum, I think the future of this research depends on figuring out a way around these methodological limitations. 

 

The “What’s The Return On Equality?” Mini-Symposium:

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

What’s The Return On Equality: Darren Rosenblum On Quotas

Darren Rosenblum is a Professor of Law at Pace Law School. He practiced international arbitration at Skadden, Arps, Slate Meagher and Flom LLP and at Clifford Chance LLP in New York from 1998-2004. Darren’s scholarship focuses on comparative corporate governance and international gender equality, and he (together with Daria Roithmayr) has been interviewing board members in France about their views on gender diversity and quotas in the boardroom.  One of the things that I find quite striking is the similarity between Darren’s interviews with French board members and our interviews with US board members, despite differences in law, culture, business norms, and gender norms across the two countries.  Hopefully, this is something that Darren and I can explore in our mini-symposium this week. 

Darren’s post is below. 

****************************************************************** 

Thank you to Kim Krawiec for pulling together what we hope will be a great conversation about a crucial topic.  I have spent the past decade, on and off, focusing on sex quotas, both those for political representation and corporate governance.  This first post will highlight some of the conclusions of this work, including the most recent piece, co-authored with Daria Roithmayr, More than a Woman: Insights into Corporate Governance after the French Sex Quota, which draws on interviews of men and women board members of a third of France’s CAC 40 firms.

Thinking about quotas must be a comparative endeavor given their remarkable popularity outside the United States.  Over one hundred countries have some form of political representation quota, such as France’s Parity quota, discussed in my article here, as countries around the world internalize international sex equality norms, as I argued here.  More recently, we are seeing a wave of corporate board quotas. Even Germany, a long-standing opponent to such quotas, adopted a quota requiring 30% of board members to be women.

Although many in Europe presume the benefits of quotas, the notion that women’s presence will prove good for growth lacks conclusive proof.  Some studies, such as the one conducted by Credit Suisse study, find this to be the case; others take the opposite view.  While such studies proliferate, I find myself skeptical of these “business case” arguments, principally because of the weak link between board deliberations and corporate success and whatever it is that we presume women bring to the table.  

I’m also skeptical about quotas because of the way they assume that gender comes in binary form.  This binary approach overlooks the complexity of how gender is lived.  Finally, I am skeptical about quotas because they come with substantial costs for men and other sexes, and possibly even for firms who wish to choose people who may not fit within the quota.  Men lose their board slots, and the opportunity to join boards as boards ask women to occupy those seats.  The quota’s binary reinforces a notion of sex difference, whereas interviewees reported that men and women in the board context were more similar than different. On the other side of the equation, quotas benefit mostly elite women and not broader populations.

Notwithstanding my skepticism, two arguments surface to justify quotas: an egalitarian justification and a market justification.  First, with regard to equality, quotas are designed to put into action the idea that the law should be devoid of “fixed notions concerning the roles and abilities of males and females.” Mississippi University for Women v. Hogan(1982). Quotas close sharp disparities between men and women that persist despite decades of educational equality. They might also help to erase the family/market distinction, as I argued in Feminizing Capital: A Corporate Imperative, a dichotomy that has awarded men the public sphere of the market as it relegated women to the private sphere of the family. When gender balance exists in all areas of life, these fixed notions—male vs. female, market vs. family – might finally begin to disappear, as I argued in Loving Gender Balance. Corporate quotas might even serve to advance an unsexed vision of the family, as I described here.  

Second, quotas are also supported by a market justification. Quotas offer firms a unique chance to remake the board’s membership. Here, the quota acts as a term limit, allowing firms to benefit from new and perhaps more innovative blood.  So for example, French firms under the quote have been choosing foreign women who “kill two birds with one stone,” globalizing the firm while complying. Indeed, as Daria Roithmayr and I argue in More than a Woman: Insights into Corporate Governance after the French Sex Quota, quotas might work to improve performance not because of gender but because of the opportunity to include outsiders—people who specialize in labor or environment, or come from outside the club of the Grandes Ecoles, the small network of French universities that creates the French elite. Bringing these outsiders on board might give rise to even greater stakeholderism in Europe, or what Veronique Magnier and I described as a Transatlantic Divergence of Corporate Governance.

Over the next few days, I’m thrilled that we will explore these questions together, as well as other, new avenues of inquiry on quotas and other diversity efforts. 

 

The “What’s The Return On Equality?” Mini-Symposium: 

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

Seton Hall Law Announces Dean Finalists

And they are:  Ray Brescia (Albany Law School); Alberto Coll (DePaul College of Law); Raymond Pierce, (partner at Nelson Mullins Riley & Scarborough); and Kathleen Boozang and Erik Lillquist (both of Seton Hall).  Check the link for extended bios.

 

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

Next up is Lisa Fairfax, the Leroy Sorenson Merrifield Research Professor of Law at the George Washington University Law School. Lisa teaches courses in the business area including Corporations, a Securities Law Seminar, and Contracts II, and her scholarly interests include corporate governance matters, fiduciary obligations, board diversity, shareholder activism, and securities fraud. Lisa is also the co-director of the DirectWomen Board Institute, which promotes board diversity by identifying and supporting qualified women attorneys to serve as board candidates. Lisa’s 2005 Wisconsin Law Review article on board diversity was actually one of the first law pieces I ever saw on the topic and was one of the first things we read when we embarked on our project, so I’m especially happy that she has agreed to post with us. 

Lisa’s post is below.

*******************************************************************

Thanks so much to Kim for the invitation to contribute to the discussion on board diversity.  I thought I would start by trying to respond to at least one of Kim’s questions: what do diversity advocates hope to achieve, and by extension, what do I hope to achieve?

First and foremost, I think that most diversity advocates today insist that board diversity will improve a corporation’s financial performance.  And while the evidence is mixed, there are certainly several studies suggesting a correlation between diverse boards and better financial returns.  In this regard, diversity advocates hope—as do I—that diverse boards will have a positive impact on firm performance.

Second, board diversity advocates hope that diverse boards will improve board decision-making by undermining groupthink and encouraging boards to consider a broader range of perspectives when carrying out their fiduciary responsibility.  And this is a hope that I share.  But as I have said elsewhere, I do think it is important to be realistic about this process.  And that realism means acknowledging that sometimes whether diverse directors will add a diverse perspective may depend upon factors such as critical mass and the extent to which boards themselves create a culture in which active questioning is encouraged.  That realism also means acknowledging that sometimes when there is true diversity of perspective, the process may take longer, people may feel uncomfortable, groups may feel less cohesive.

Third, diversity advocates hope that diverse boards will be better equipped to navigate the more global and diverse world in which we live, and thus may be better able to relate to corporations’ increasingly diverse employee, customer, consumer, and client base.  I certainly hope and believe that a corporation willing to diversify its board is much more likely to relate to our diverse landscape more generally.  But I will admit that I hope this sentiment does not mean that homogeneous boards need not seek to relate to such diversity.

Ultimately, however, what I hope diversity efforts will do is diversify boards.  To me, that is an end of itself.  And that end is important for at least two reasons.  First, because there is no good reason for corporate boards not to better reflect the workforce and the population.  Second, because part of the reason corporate boards are not more diverse comes back to subtle and unconscious biases that continue to ensure that people replicate themselves in the boardroom and many of the pipelines leading to the boardroom.

So while most diversity advocates would rather focus on arguments suggesting that board diversity is good for business and not just good, my hope is that we can not only diversify boards, but also that we can get to a place where there is no need to justify that diversity as a means to some economic end.

 

The “What’s The Return On Equality?” Mini-Symposium: 

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Rothmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1 

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

As some Loungers will already know, board diversity is a topic that I’ve studied for several years. Together with Lissa Broome and John Conley at the University of North Carolina, I have built on the type of ethnographic research for which John, an anthropologist, is justifiably well-known.  At some point during this week’s mini-symposium I’ll put up links to our articles for anyone who is interested.  We are also working on a book on board diversity, which I hope we’ll have finished by the end of this summer.

In this first post, though, I just wanted to talk a bit about what intrigued us about board diversity as a research topic and why we felt it was important to hear what directors themselves had to say about diversity efforts in the boardroom.  We were struck by the frequency with which the business case for board diversity is put forth by the popular press, shareholder activists, and directors themselves, despite the lack of empirical support (we review the literature here, for example).  We wanted to hear directors, in their own words, discuss board diversity – was it actively pursued by the boards on which they sit? If so, why? What benefits did they believe stemmed from a diverse board? Our interest was made all the more salient by events in Europe, where many countries have adopted board gender quotas (a point that will likely be discussed by some of our guest bloggers this week.)  

Working from a topical outline, we conducted open-ended interviews with 57 directors of publicly-traded corporations and a limited number of other persons of interest (for example, institutional investors, executive search professionals, and proxy advisors) asking them to share their views on a variety of corporate governance and boardroom issues, including the effect, if any, of race and gender diversity in the boardroom. The interviews range from forty-five minutes to two hours in length and each interview is taped and transcribed.  As a group, we then listen to each taped interview at least once with transcript in hand, analyzing each interview qualitatively with a focus on the themes that the respondents identify, the emphases given to these themes, the stories (or narratives) that they tell, and the details of the language that they use. We also thematically code the transcripts and use sorting software to get another, complementary view of the frequency and distribution of the various themes. 

As we discuss at length in our published work, several overarching themes have been pervasive in our interviews: First, there is near-unanimous agreement (with only one clear dissenter) that board diversity is a good thing, a valuable outcome that is worth striving for. But second, it is very difficult for our respondents to provide examples from their experience of when board diversity has made a tangible difference. We have heard abundant stories about when other kinds of diversity—what might be called functional diversity: different business backgrounds and skills, for example—have made a difference in how effectively boards do their work. But pressing respondents for comparable stories about demographic diversity has yielded very little beyond awkward silences. Respondents have sometimes commented on that very awkwardness, noting how difficult it is to talk about gender and—especially—race making a difference without engaging in essentializing or stereotyping.

But even if they have found it difficult to give concrete examples of the benefits of director diversity, our respondents have provided well- developed (and perhaps well-rehearsed) conceptual arguments. I’ll be back in later posts to discuss some of those arguments and the inherent tensions in them.

 

The “What’s The Return On Equality?” Mini-Symposium: 

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1 

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

What’s The Return on Equality?: Aaron Dhir on Quotas

Folks – we’re kicking off the mini-symposium, "What’s The Return On Equality? A Conversation About Board Diversity" with the below post from Aaron Dhir. Aaron is a Senior Research Scholar at Yale Law School and a Global Justice Senior Fellow at the Yale MacMillan Center. He is an Associate Professor (with tenure) at Osgoode Hall Law School and has served as a Visiting Scholar at Harvard University, the University of Oxford, and University College London. His research interests include corporate law, governance, and theory, and the intersections of transnational business activity with international human rights norms. He is currently writing a book on corporate governance and diversity, Challenging Boardroom Homogeneity, which is under contract with Cambridge University Press.

Below is Aaron’s post.

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My sincere thanks to Kim and Darren for organizing this mini-symposium on board diversity and to The Faculty Lounge for hosting us.

My new book, Challenging Boardroom Homogeneity, will be published next month by Cambridge University Press.  In it, I draw on semi-structured interviews with corporate board directors in Norway and documentary content analysis of corporate securities filings in the United States to empirically investigate the two main regulatory models designed to address diversity in the boardroom — quotas and disclosure.

In this post, I focus on quotas.  While quotas are anathema in the United States, their presence in Europe has ignited a heated global debate.  In their most potent form, quotas mandate particular levels of gender balance in the boardroom.  Countries such as Norway, France, Italy, Iceland, Belgium, and (just this month) Germany have all taken this path.  In Germany, both genders must constitute at least 30 percent of the supervisory boards of specified German companies beginning in 2016.  In Norway, non-compliant firms run the risk of court-ordered dissolution.

Little is known about the day-to-day operation of quotas around the world.  To fill this void, I interviewed Norwegian corporate directors about their experiences under Norway’s controversial law – the very first quota on the books.  The participants in my study included men and women, as well as directors appointed before and after the law came into effect.

A strong majority of the directors I interviewed supported the law.  The dominant narrative my interviewees conveyed was that quota-induced gender diversity has positively affected boardroom work and firm governance.  Generally, respondents emphasized the range of perspectives and experiences that women bring to the board, as well as the value of women’s independence and outsider status.  They also stressed women’s greater propensity to engage in more rigorous deliberations, risk assessment, and monitoring.

But even if diversification has positive effects on company governance, the question remains:  Why are quotas an appropriate mechanism by which to achieve those benefits? 

Some commentators impugn the wisdom of quotas, charging that they stigmatize and marginalize their beneficiaries.  As one critic wrote in The New York Times:  “women admitted to boards in order to fulfill a quota are unlikely to be seen as equals whose presence at the table is merited.”  These critiques must be taken seriously.  If the recipients of affirmative action feel isolated, or that they are perceived as mere tokens, how can such measures possibly be justified?

Without question, quotas are an imperfect means of diversifying corporate boardrooms and in the book I explore the limitations of the quota model.  That said, critics sometimes paint an incomplete picture and seldom ground their arguments in the voices of those who presumably matter the most — those who actually live under quota regimes.  What do they themselves say about quotas’ possibly pernicious effects? 

My research asks exactly that question.  Only a small minority of board members I interviewed felt that female directors were stigmatized or isolated.  My female interviewees explained this in different ways.  Some highlighted the importance of the substantial number of women required by the law.  By mandating gender balance, the law made marginalization difficult, if not impossible.  As one female director told me:  “you can’t stigmatize 40 percent of the board. . . . [Y]ou could have stigmatized one person, or 15 percent. . . . But you can’t stigmatize 40 percent.”

The majority of female participants reported that they felt comfortable on the boards on which they sat, discussed their contributions to these boards, and confirmed the feeling that their boards recognized or appreciated these contributions.  Though their stories are complex, most characterized the quota as a positive vehicle that had democratizedaccess to the upper echelons of the corporation — a space previously closed to them.  This suggests that the benefits of the quota law have outweighed any stigmatizing costs, to the extent that these costs have materialized. 

Some critics may suggest that these results are self-evident – of course the beneficiaries of quotas will support the measures that opened up the otherwise closed doors of the boardroom.  The reality, however, is far more complex.  Most directors, including women, were initially opposed, hesitant, or agnostic about quotas.  It was only after seeing the law in action and directly experiencing its effects that they eventually came to endorse it.  A significant degree of the support ultimately stemmed from the view that the law was necessary to diversify boards in a meaningful way.  For some directors, this acceptance of quotas caused them to question their own deeply held beliefs in free market principles.

There are many difficult and unresolved questions about the value and effects of quota laws.  Whether a quota is appropriate for a given country will depend on that country’s socio-political context, its corporate governance culture, and characteristics particular to firms and industries.  As policymakers around the world wrestle with these issues, however, it will be important to draw from the experiences of those who have lived under quota regimes.  These narratives give us reason to believe that quotas are worthy of careful public policy consideration.

In my next post, I will discuss the United States’ experiment with diversity reporting.

 

The “What’s The Return On Equality?” Mini-Symposium:

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

Black Originalism Part 3: The Syracuse Convention of 1864

Having set the stage in prior posts (here and here), I want to delve a bit into texts from the Civil War/Reconstruction black public sphere.  The first I will highlight is the National Convention of Colored Men, held in Syracuse in October 1864. 

The Black Convention Movement of the nineteenth century is an important and undervalued source of public debate in the black public sphere.  The movement itself arose as part of the abolitionist movement, and a number of important conventions had been held in the north prior to the war.  (The Colored Conventions Project at the University of Delaware has a wonderful resource webpage for these conventions here.)  Both because it was held as the war’s end was in sight, and because of the issues addressed, the Syracuse Convention of 1864 can be seen as the first Reconstruction black convention.  In the ensuing five years many more—local, state, and national—would follow (including the Colored National Labor Union Convention of 1869, pictured to the right), in part as an extension of the civil society movement the Syracuse Convention aided by founding the National Equal Rights League at Syracuse. These leagues, along with Union Leagues, were critical focal points for early Reconstruction black activism and community-building. 

Illinois Law Dean Finalists

The University of Illinois College of Law has announced its dean finalists and they are:

Robert Ahdieh (Emory University School of Law)
Vikram Amar (University of California, Davis, School of Law)
Laura Rosenbury (Washington University Law School)

Reminder: "What’s The Return On Equality? A Conversation About Board Diversity" starts Monday

This is just a reminder that the Faculty Lounge mini-symposium on board diversity will be held next week.  Regular Lounge readers know that we occasionally host mini-symposia on special topics here, such as the recent Taxing Eggs symposium.  And next week’s topic will be board diversity.

Efforts to encourage greater corporate board diversity are now nearly universal.  Though different jurisdictions employ different methods – from reporting to quotas to more informal public, market, or government pressure – the drive to diversify the boardroom is being felt around the world.  But why?

The Faculty Lounge will host a special mini-symposium on corporate board diversity with guest experts in the field.  What methods are different jurisdictions using to promote board diversity and with what effect?  More importantly, what do board diversity advocates hope to achieve with these changes?  Finally, what do our panel of experts believe will be the ultimate result of these efforts?  

Join us in the Lounge next week as our panel of experts address these and other issues.  Panelists include:

Lissa Lamkin Broome

Wells Fargo Professor of Banking Law and Director of the Center for Banking and Finance

University of North Carolina, School of Law

John Martin Conley

William Rand Kenan Jr. Professor of Law

University of North Carolina, School of Law

Aaron A. Dhir

Associate Professor, with tenure, Osgoode Hall Law School; Visiting Professor of Law, Yale Law School, and Global Justice Senior Fellow, Yale MacMillan Center.

Lisa M. Fairfax

Leroy Sorenson Merrifield Research Professor of Law; Director of Conference Programs, C-LEAF

Kimberly D. Krawiec (a.k.a. me!)

Kathrine Robinson Everett Professor of Law, Duke University 

Darren Rosenblum

Professor of Law, Pace Law School

Daria Roithmayr

George T. and Harriet E. Pfleger Chair in Law

USC School of Law

 

See you all next week!

 

The “What’s The Return On Equality?” Mini-Symposium: 

What’s The Return On Equality? A Conversation About Board Diversity

What’s The Return on Equality?: Aaron Dhir on Quotas

What’s The Return On Equality: Kim Krawiec On The Business Case For Board Diversity

What’s The Return On Equality: Lisa Fairfax on Board Diversity’s End Game

What’s The Return On Equality: Darren Rosenblum On Quotas

What’s The Return On Equality: Daria Roithmayr

What’s The Return on Equality: Aaron Dhir On Disclosure

What’s The Return On Equality: Taking Stock of Day 1

What’s The Return On Equality? Lisa Fairfax on Board Vacancies: The Cure and the Problem?

What’s The Return on Equality: Aaron Dhir Responds To Questions

What’s The Return On Equality: John Conley Responds To Daria Roithmayr

What’s The Return On Equality: Darren Rosenblum On Examining Diversity 

What’s The Return On Equality: Daria Roithmayr on Quotas

What’s The Return On Equality: Lisa Fairfax On Will We All Get There?

What’s The Return On Equality: Kim Krawiec on Lisa Fairfax on Will We All Get There?

Law Professors Who Have Passed Away Recently

As I've noted over at Leiter, several law professors have passed away in the past few weeks.  They include Robert Pitler (Brooklyn), Dave Frohnmayer (Oregon), Charles Rice (Notre Dame), and William Wilks (South Texas).  

University Governance

This may be my most "faculty loungy" post to date, but also the shortest. Law schools are in many ways separate from the rest of the university. They are professional schools, they have no undergraduates, and their policies and styles are just different. Indeed, they are so different that we have standalone law schools, separate from any university at all!

Yet, most law schools are part of a bigger university. My suggestion is that law professors consider taking on university-wide governance roles, whether on faculty governments, committees, cross-disciplinary programs, or whatever your school offers. I've been my law school's Faculty Congress representative for the last two years, and as part of that I sat on the "committee of the faculty," met with the university president, and interviewed candidates for the new provost.

I've learned an amazing amount doing this: about how the rest of the university works, about what's important in undergraduate and graduate education and research, about the trials facing campuses today, about the differences between the colleges, and about how great my colleagues in other departments are. This has helped me evangelize the good things we are doing at the law school, but also to bring new ideas back to the law school.

Thus, I recommend such governance activities for any law faculty members. There's something to be said about breaking out of the insular cocoon.

LSAC Data and Predicting Number of Applicants for Fall 2015, Part 12

The LSAC is announcing that "As of 3/13/15, there are 279,589 fall 2015 applications submitted by 41,136 applicants. Applicants are down 4.7% and applications are down 6.7% from 2014. Last year at this time, we had 79% of the preliminary final applicant count." If this year's applicants follow last year's pattern, we will have approximately 52,734 applicants for fall 2015.

The last post in this series is here.

Florida Law Dean Finalists

Thanks to a commenter to a prior post, I can now tell you that the finalists in the University of Florida School of Law dean search are: Michael Cahill, Laura Rosenbury, Mark Alexander and Charles Tabb.

Duquense Law Seeks Contracts VAP

This just in:

Duquesne University School of Law invites applications for a visiting assistant professor for the 2015-2016 academic year. The appointment is a one-year, non-tenure-track appointment with a 9-month contract; however, if the law school has an opening for the 2016-2017 academic year, either for a visitor or for a tenure-track position, the visiting assistant professor will be entitled to apply. Teaching and scholarship responsibilities will focus on the area of Contracts with other areas of the teaching and scholarship package subject to negotiation—preference will be given to areas of need, including Remedies and the Uniform Commercial Code. Applicants should have superior academic credentials and a record, or the promise, of excellence in teaching and legal scholarship, preferably in the area for which the appointment is sought. Previous teaching and practical experience is desirable. Entry-level applicants may demonstrate scholarly promise by publications in scholarly journals or scholarly works in progress.

Interested candidates should submit a letter of interest and a curriculum vitae to apply.interfolio.com/29165. We especially encourage applications from racial minorities, women, and others who would enrich the diversity of our academic community.

Florida Law Dean Semifinalists Named

You can strike Jennifer Bard, who was named the new dean at Cincinnati, but the list of semi-finalists to lead the University of Florida School of Law is here.