Let shareholders decide on diversity in boardrooms

A boardroom.
A boardroom.PHOTO: CREATIVE COMMONS

If greater female participation in corporate boards indeed enhances shareholder value, why not let the intended beneficiaries - the shareholders - decide (Gender quotas needed to get more women into boardrooms: Forum, Sept 20)?

Details of board composition of listed companies are fully disclosed to the public, so shareholders should be in a position to decide for themselves.

If they believe that a listed company does not have sufficient female representation in its board and therefore is not performing to its potential, they can signal their displeasure to the board by writing to it, during annual general meetings or simply by cashing out of the company. The share price will be impacted and the board will have to take notice.

It may well be that greater female board participation enhances shareholder value in some but not all companies. So let the shareholders decide on a company-by-company basis.

If female board participation is not intended to enhance shareholder value but to promote gender diversity as an end in itself, then shareholders are entitled to ask: Why my company? Why my money? Why is this my responsibility as an investor?

And if gender diversity is deemed a social responsibility of corporate boards, how about age diversity, racial diversity, religious diversity, needs diversity, and sexual orientation diversity?

I am all for removing impediments to qualified women joining corporate boards, just as I am against artificially mandating pre-determined gender diversity by way of quotas and the like. Indeed, this principle ought to apply to not just corporate boards, but also to all public and quasi-public organisations.

Cheng Shoong Tat

A version of this article appeared in the print edition of The Straits Times on September 26, 2019, with the headline 'Let shareholders decide on diversity in boardrooms'. Print Edition | Subscribe