The case for having women on the board

 

WSJ Oct. 2020

Will money managers increase diversity?

"David Swensen is the veteran investment chief of Yale University’s $31.2 billion endowment. Earlier this month, he told the dozens of firms that manage Yale’s money they would be measured on their progress increasing the diversity of their investment staffs" (WSJ Oct. 2020).

Let's conduct a thought experiment. Suppose that the executives face incentives that encourage them to maximize returns on the money they manage. 

1. If executives know that diversity increases returns, would Yale need to measure progress on increasing diversity? Would the threat of moving to another company align the interests of Yale and the money managers?
2. Under what conditions would the threat compensation improve the alignment the interests between Yale and the money managers?
3. Under what conditions would the mandate and compensation misalign the interests?

Does having labor sit on the board increase wages?

  

This paper says that the answer is,"No".

I predict that Starbucks will report more diversity in its workforce by 2025

"Starbucks Corp. SBUX -0.68% said it would mandate antibias training for executives and tie their compensation to increasing minority representation in its workforce" (WSJ Oct 2020). 

Let's conduct a thought experiment. Suppose that the executives face incentives that encourage them to maximize profit (or value). 

1. If executives know that antibias training and minority representation increase profit, would Starbucks need to mandate antibias training and tie compensation to increasing minority representation? Would the mandate and compensation improve the alignment the interests of the executive and owners?
2. Under what conditions would the mandate and compensation improve the alignment of the interests of executives and owners?
3. Under what conditions would the mandate and compensation misalign the interests of executives and owners?