Editor’s note: This article has been updated to include comment from Jessica Rixom, one of the study’s authors.
University of Nevada, Reno (UNR) College of Business researchers found that women are viewed more as “tokens” in the workplace when a gender-based hiring quota is put in place, according to the study published in January 2023.
Gender quota laws, like was passed in California, require companies to place a specific number of women on company boards. Professors Jessica Rixom, Mark Jackson and Brett Rixom found in their research that investors view women executives as “tokens” when companies appoint the exact number of women to fulfill a quota, but are perceived as tokens less when companies exceed quota, according to the study’s abstract. (RELATED: California Court Blocks Diversity Quotas For Corporate Boards)
“We find evidence that under a quota system, U.S. market participants tend to view female directors as tokens when the firm is just at the quota minimum, and these perceptions both affect their view of the firm’s prospects and negatively influence investment decisions,” the abstract reads. “Importantly, however, we find that these negative effects can be offset and that resource dependence theory holds if the firm exceeds the quota, signaling that the hiring of female directors is not simply compliance-dependent and subsequently leading U.S. market participants to invest more resources in the firm.”
Researchers conducted the study by manipulating the number of female board members at a firm using 207 crowdsourced participants, according to the abstract.
“While a diverse board can be seen as beneficial by nonprofessional investors, how the diversity was created matters,” Jessica Rixom told the Daily Caller News Foundation. “When diversity is mandated, the investors cannot tell if the diversity appointments were made to acquire the benefits that resource dependence theory predicts or to meet a quota, which would in turn make the minority members be viewed as tokens. When making policy decisions and legislation, it is important to consider how the minority members themselves will be viewed so as to avoid undermining their contributions.”
The researchers used California gender quota laws as a model for conducting their study. While such laws aim to foster diversity in the workplace, Jackson suggested the laws could result in employees viewing minority members as “less qualified” and that those members could feel as though they were not hired based on merit.
“We started talking about it back when California was first proposing a gender quota requirement for the boards of firms headquartered in the state,” Jessica Rixom told the DCNF. “It is a controversial issue and we had concerns over how this step could influence people’s perceptions of the board and its members. As researchers, we realized that instead of just wondering how the markets would react, we were equipped to discover what the markets thought about the California proposal.”
BREAKING: The California Court of Appeal has upheld two injunctions against California quota requirements for corporate boards (1/3). https://t.co/qIDMF7lMSZ
— Judicial Watch ⚖️ (@JudicialWatch) December 20, 2022
“It is generally accepted that a more diverse board will be more effective, as different points of view and life experiences will better equip a board to lead the firm,” Brett Rixom told Nevada Today. “What we question is the efficacy of a quota law to achieve better gender diversity on the boards of public firms. Instead of rushing to legislation like quotas to increase minority representation, lawmakers can consider whether their solution may undermine the very individuals they are trying to promote.”
Brett Rixom and Jackson did not immediately respond to the Daily Caller News Foundation’s request for comment.
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