Question

Why does it seem to be on increasing women of the Board but not non-white ethnic minorities? Please discuss and support your opinion?

Answer 1

From a theoretical perspective, the effect of ethnic diversity on monitoring could be positive, neutral or negative. Board monitoring may be stronger if ethnically diverse boards have more information and make better monitoring decisions, or if minority directors are stronger individual monitors due to higher independence (due to their ethnic difference) and higher director quality (due to discrimination). However, such differences may not hold in practice. Minority directors are typically selected after a very thorough vetting, and subsequently may be similar in terms of perspectives to Caucasians. Additionally, being in a minority may create pressure to conform and not behave differently. Thus, monitoring outcomes could be no different for ethnically diverse boards. Alternatively, differences could be such that they result in conflict and less efficient monitoring decisions.