The economic versus moral perspective of board diversity: A time for regulation after the financial crisis?

The recent financial crisis has led to a loss of trust in the quality of corporate governance worldwide. Among other reforms, the European Commission (EC) currently intends to regulate board diversity (at first gender diversity) by quota as companies did not voluntarily meet the EC's expectations on this issue so far. Considering the political debate it often becomes obvious that the debate on board diversity is primarily discussed from a moral perspective and on the basis of standard economic arguments or stereotypes ignoring the majority of empirical findings in this field. Focusing on this gap we identify very mixed results on the link between different attributes for board diversity and economic outcomes. Furthermore, these empirical findings mainly do not consider important aspects of work psychology and organizational behavior in the black box/closed circle of corporate boardrooms and often only focus on single attributes for board diversity and their direct impact on economic outcomes. Thus, without having a deeper understanding of the processes and dynamics within corporate boardrooms, we do not think this is the right time to regulate board diversity. Additionally, we think such a measure disproportionately intervenes in companies' authority to staff their boards and neglects companies' specific (economic) situation.