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

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.

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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. For instance, an event study conducted in Singapore by Kang, Ding and Charoenwong, concludes that investors react positively on a higher female representation, particularly if they contribute for the independence of the board. Therefore, it might be stated that although the inconclusive link between female directors and firm performance is mostly regarded as a substantial drawback for the notion for more women on boards, future research might present a more coherent picture.
A more recent attention is drawn by academics to the suggestion that boards indeed might not benefit from more active participation of women in the boardroom, as their different views might provoke conflicts in the course of taking decisions and make the process more time-consuming and ineffective. However, the role of the well-functioning board is to be constructive and to lead to the most successful strategy and result, not merely to pass decisions smoothly.
As can been seen, evidence against more women on boards is rather weak. It raises concerns, however they all could be overcome through a more comprehensive research. Therefore, it is easily concluded that the benefits that women bring on boards considerably prevail over any possible drawbacks.
3. The 40% Objective:
Provided that the academic community and business leaders agree that corporate boards benefit from higher female presence, the recent debate is concentrated on how to achieve this result effectively. The European Commission has taken a leading role in this process, first suggesting several recommendations for increasing women's board in 1984 and 1996, as well as providing several strategies, which highlight the benefits of women's presence on boards. However, the figures still show slow and unsatisfactory improvement, with an average of 13.7% female presence on corporate boards in 2012. Experts at the Commission noted that, if the rate at which women are joining boards, remains the same in the coming years, they will account f