“comply or explain” legislation, or may have punitive measures associated with non‐compliance, such as fines, negative consideration for state contracts, or suspension of director pay. The case for quotas rests on studies such as a 2015 meta‐review of 200 individual studies showing that greater female membership on boards resulted in better financial performance for firms.<sup>87</sup> Female presence on boards can also serve as a signaling device and provide role modeling for women elsewhere in the economy.

Evidence is mixed on the success of different types of quota programs. A 2011 Harvard University review of randomized allocation of quotas for political positions in India and the unanticipated introduction of board quotas in Norway (see Country Example 6) provides some broad conclusions about the impact of gender quotas. The study found that quotas do increase female leadership in both politics and business, and suggests that the greater presence of women in political and business leadership roles can positively influence public perception about female leaders. However, the study also found some negative short‐ term impacts on firm financial returns from corporate board quotas.<sup>88</sup> Research on quotas from the United States suggests that quotas will be most effective if they are time‐ limited so as not to be seen as entitlements, and are complemented by improvements in recruiting and screening processes, as well as on‐the‐job training for female employees.<sup>89</sup> Quotas with sanctions were found to be most effective, while quotas with no or limited sanctions (including comply‐or‐explain policies) were found to be less effective.

A weakness of quotas is that they have the potential to reduce efficiency in labor markets if less qualified women are hired and promoted. In addition, quotas can lead to a perception that female employees in general are underqualified and are only hired or promoted due to these requirements, or that firms are non‐meritocratic.<sup>90</sup>

# **Country Example 6. Norway: Board gender quotas led to a substantial increase in female board members, but may have resulted in the appointment of less qualified directors**<sup>9192</sup>

**Program:** In 2002, Norway announced a quota of at least 40 percent women on corporate boards. Sanctions for non‐compliance were severe: non‐compliant firms would be de‐listed from the Oslo Stock Exchange, leading all Norwegian companies covered by the law to comply within six months of the deadline.

**Outcome:** The number and percentage of women on corporate boards increased substantially after implementation of the quota. Norwegian firms that complied earlier had boards with more women. Firms that were not covered by the quota law did now show significant increases in the number of female directors. Post‐quota, the gender gap in earnings within boards fell substantially. However, it does not appear that the law benefitted female employees of companies subjected to the quota, and there was no accompanying change in female enrollment in business education.  These broader

> 87 Kris Byron and Corinne Post, “Women on Boards and Firm Financial Performance: A Meta‐Analysis,” _Academy of Management Journal_ 58 (October 1, 2015).

> 88 Rohini Pande and Deanna Ford, “Gender Quotas and Female Leadership: A Review," Background Paper for the World Development Report on Gender (World Bank Group, April 7, 2011).

> 89 “Gender Equality and Development.”

> 90 “Gender Equality and Development.”

> 91 Siri Terjesen and Ruth Sealy, “Board Gender Quotas: Exploring Ethical Tensions from a Multi‐Theoretical Perspective,” _Business Ethics Quarterly_ , January 2016.

> 92 Marianne Bertrand et al., “Breaking the Glass Ceiling? The Effect of Board Quoats on Female Labor Market Outcomes in Norway,” NBER Working Paper Series (National Bureau of Economic Research, June 2014), http://www.nber.org/papers/w20256.pdf.

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