The role of nomination committees in diversifying boards in an emerging market context

Abstract

Purpose Several mechanisms exist to address the low levels of gender and race diversity in boardrooms, including mandatory quotas, voluntary targets and investor activism. Based on the similarity-attraction theory, the authors investigated whether nomination committees of companies listed on the Johannesburg Stock Exchange (JSE) could serve as an internal change mechanism to promote board gender and race diversity. Design/methodology/approach Panel data on the gender and race diversity of the nomination committees and boards of the 40 largest listed companies (the JSE Top 40) were analysed over the period 2011- 2016. Panel regressions were conducted to investigate four hypothesised associations. Findings More diverse boards had significantly more diverse nomination committees in terms of both gender and race. A significant positive association was furthermore reported between the race diversity of nomination committees and the appointment of new directors of colour. The latter finding could partly be attributed to legislation to enhance black representation in all spheres of the South African economy. Originality/value South Africa offers a unique socio-political setting in which to conduct board diversity research. In line with the similarity-attraction theory, it is shown that diverse nomination committees have an essential role in setting and achieving board gender and race diversity targets.

The impact of board size on board demographic faultlines

“…Nomination committees need to take into account the trade-off between added value and low-quality decisions before increasing a board's size (Appiah et al, 2016;Cheng, 2008;Kaczmarek et al, 2012b;Nguyen and Faff, 2006). Second, nomination committees need to take into account the faultlines emerging or getting stronger as a result of new board members (Mans-Kemp and Viviers, 2019). Managing gender-age faultlines is extremely important as past research indicates that these faultlines are associated with relationship conflict and other negative behaviors (Choi and Sy, 2010).…”

Fuzzy bundling of corporate governance practices and performance of Indian firms

“…The debate on the linkage of CG to firm performance is on-going across the world, and the results of the research on the impact of CG practices at the firm's level affecting the financial performance of companies are dichotomous across countries (AlHares, 2020;Mans-Kemp and Viviers, 2019). It is also a widespread notion that the positive effect of good CG on firm's performance ultimately translates into a better future stock process for listed forms.…”

Investigating the extent and impact of director overboardedness using a comprehensive measure

“…Nomination committees need to conduct thorough performance evaluations (Kiel and Nicholson, 2005) which should ideally be used as the basis for remuneration-related decisions (Morgan and Poulsen, 2001). Nomination committee members should also ensure that proficient, diverse board candidates are nominated (Appiah and Chizema, 2016; Mans-Kemp and Viviers, 2019).…”