Choice and Merit Are Better Than Mandatory Female Quotas

The U.S. Court of Appeals will soon rehear the New Civil Liberties Alliance’s National Center for Public Policy Research v. SEC lawsuit challenging SEC-issued “Board Diversity Rules” with oral argument set to begin the week of May 13th. These diversity mandates would require gender, race and sexual orientation quotas to be met on board membership by companies listed on the Nasdaq stock exchange. If the quotas are not met, the companies will be forced to explain why they failed to meet the requirements.   

Gender board disclosure mandates like the one attempted by SEC may be well-intentioned, but they fail to deliver on intended outcomes. Advocates of greater board diversity commonly argue it improves a firm’s financial performance. The data are less certain. Plus, these mandates ignore the gains women have made over the past 40 years.


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