Angel Zhong (0433 810 413 or angel.zhong@rmit.edu.au)
Topics: equality, board diversity, stock market listing, firm performance
“The second largest stock exchange in the world, NASDAQ has submitted a proposal to promote greater board diversity to the Securities and Exchange Commission (SEC).
“The purpose of this proposal is to ‘advance board diversity and enhance transparency of diversity statistics’, according to NASDAQ.
“If approved, Nasdaq-listed companies will be required to have at least one female, and at least one director from a minority race,ethnicity, or LGBTQ.
“If a firm does not meet the requirement, it could be kicked out by NASDAQ once this proposal goes through.
“Board diversity is important for promoting equality in society. It has also been shown by academic research to be related to an increase in a firm’s operating performance, disclosure quality, and better innovation.
“What are the implications of this proposal for the Australian Securities Exchange (ASX)?”
“Currently, the ASX focus is on gender diversity to promote the presence of females in senior management, mandating a 30% gender diversity target.
“Compared to NASDAQ’s new proposal, which includes both gender and racial diversity for each firm, the ASX has a long way to go.
“Australian firms are on the right track; the latest board diversity statistics by the Australian Institute of Company Directors (AICD) show the percentages of female directors is 26.0% and 32.1% for the ASX All Ords and the ASX200, respectively.
“The proposal by NASDAQ, if approved, will likely also accelerate the move towards diversity in both gender and race.
“Australian firms, and listed firms around the world should be prepared for the trend towards enhanced diversity in senior management roles.”
Angel Zhong is a Senior Lecturer in Finance in the School of Economics, Finance and Marketing at RMIT University. Her research focuses on investment and investor behaviour in share markets and corporate governance around the world.
***
For media enquiries, please contact RMIT Communications: 0439 704 077 or news@rmit.edu.au
