National Bureau of Economic Research Study Details Diversity Findings at Largest Institutional Investors

In a recent study from the National Bureau of Economic Research entitled, “The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice” the authors found after a 2017 “Fearless Girl” campaign by the three largest institutional investors (State Street, Blackrock, and Vanguard) “led American corporations to add at least 2.5 times as many female directors in 2019 as they had in 2016.” The three firms adopted proxy procedures of voting against the reelection of directors at entities they viewed as “making insufficient progress toward a gender-diverse board.” The study goes as far to state “[t]he growth in female directors does not appear to be driven by firm characteristics other than Big Three ownership.” The study used corporate board data from Boardex (publicly available information, including the mandated disclosures of US publicly traded firms) for the period of 2013 to 2019, specifically analyzing the data in the three years before (2014-16) and three years after (2017-19) the three firms’ gender diversity campaigns began. The data on State Street, Blackrock, and Vanguard’s holdings came from 13F reports that are required to be filed by all institutional investment managers with at least $100 million in assets under management. The study concludes by noting that the larger institutional investors can “successfully pressure companies to adopt changes that are easy to monitor at scale” and the “potential to steer other broad-based changes that have become newer targets of their voting campaigns, such as sustainability disclosures, director overboarding restrictions, and board racial diversity.”