An Interview with Professor Karin Thorburn

A: The quota was a social policy measure. Norwegian politicians were pushing for gender equality in many different settings, and in the early 2000s, the limelight fell on corporate boards. At the time, about five percent of the directors of publicly listed companies were women. The Norwegian Parliament adopted the quota in 2003, but with a sunset provision. If shareholders voluntarily gender-balanced the boards over the next two years, the quota would not be mandated. However, by December 2005, the fraction of female directors had only reached about 15 percent. So, the government wrote the quota into corporate law and gave firms two years to comply.

A: There are reports documenting a positive correlation between female directors and corporate performance. However, this correlation does not imply causality. It is possible that profitable firms are more prone to appoint female directors or that women are more willing to accept board positions in well-run firms. But, with a quota, the causal direction is clear. The forced change in the board prompts a potential change in performance. This causal relationship is what makes it so interesting to study the effects of a quota.