NCPA - National Center for Policy Analysis

Women in the Boardroom

December 24, 2003

One unintended consequence of the Sarbanes-Oxley Act -- the federal law regulating corporate governance and financial reporting -- is that it may increase the number of women on corporate boards.

However, in the consequence of corporate reform, companies are being required to change. The Act requires that independent directors be hired to serve on corporate boards. Because the Act makes it harder for members to serve on multiple board assignments it limits the number of men that are qualified and thus may increase the number of women:

  • Currently, only 13.6 percent of board members at the largest 500 companies are women, up from 11.2 percent in 1999.
  • The new emphasis on financial expertise among board members is expected to result in the recruitment of more women to serve because high-level women are represented in larger numbers in the fields of finance and accounting; 7.1 percent of the chief financial officers at the 500 largest companies are women.
  • The proportion of women directors could increase to 25 percent in 5 years, says BusinessWeek.

Despite these changes, board turnover remains slow, and board size is shrinking. But still, there is little doubt that the doors, once closed, are finally opening, say observers.

Source: Kimberly Weisul, "Make Way for Madame Director," BusinessWeek, December 22, 2003.


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