We examine the impact of a 2020 “comply-or-explain” disclosure mandate implemented by the Canada Business Corporations Act. The mandate requires that federally registered public firms either set and disclose diversity policies and targets for boards of directors and senior management in their proxy statements or explain why they have not done so. This provides new information about firms’ internal diversity practices. Using provincially registered public firms as a control group, we establish two main findings. First, racial diversity increased more for firms subject to the disclosure mandate, at least for directors. Gender diversity also increased, but only for firms not subject to an earlier rule pertaining only to gender diversity. Second, the impact of the disclosure mandate is plausibly driven by shareholder monitoring through director elections and board renewal. Overall, our findings contribute to the policy debate on the real effects of disclosure mandates on social dimensions.
| Speaker: | Dr Thomas Bourveau Associate Professor of Business, Columbia University |
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