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.

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