Introducing Board Gender Diversity to Sri Lanka

Description

Through a socio-legal lens, this book focuses on the feasibility of implementing board gender diversity rules in Sri Lanka. It demonstrates that board gender diversity rules could be a valuable tool for corporate governance development and to promote gender equality in society. The International Financial Institutions (IFIs) have reasoned that good corporate governance practices can develop the economy by attracting investors and securing foreign direct investment. Accordingly, these IFIs have included corporate governance reform as a condition for funding to developing countries. Among these reforms, board gender diversity is acknowledged as a legal concept that is capable of improving corporate governance practices and promoting gender equality in society. The benefits to corporate governance, often referred to as the economic benefits of the concept, are based on the contribution women directors can make towards advancing board effectiveness. The equality benefits underpinning this strategy depict the manner in which gender equality could be promoted by board gender diversity rules. Sri Lanka is thus an illustrative example of a developing country forced by IFIs to improve its corporate governance practices as a step towards advancing economic growth. However, the Sri Lankan legislators have not yet introduced board gender diversity rules as a measure to improve corporate governance practices within the country. This book addresses some of the ways in which board gender diversity rules could be introduced to Sri Lanka. Preface Acknowledgements Contents About the Author Abbreviations List of Figures 1 Introducing the Study 1.1 The Context of the Research 1.2 Methodological Approach 1.3 Research Questions 1.4 Roadmap to Subsequent Chapters 2 Case Study: Sri Lanka 2.1 Introduction 2.2 Key Aspects of the Geography, the Population, and the Economy 2.2.1 Geography 2.2.2 Population 2.2.3 Economic Growth and Stability 2.3 The Corporate Governance Environment in Sri Lanka 2.3.1 Corporate Governance Reforms 2.3.1.1 British Colonial Rule: Pre-Independence 2.3.1.2 Post-Independence: 1977 to 1983 2.3.1.3 Corporate Governance Reforms from 1983 2.3.2 The Corporate Legal Structure in Sri Lanka 2.3.2.1 Unlimited Liability Companies 2.3.2.2 Companies Limited by Guarantee 2.3.2.3 Limited Liability Company 2.3.2.4 Offshore Companies and Overseas Companies 2.3.3 The Regulatory Regime in Sri Lanka 2.3.3.1 The Department of the Registrar of Companies 2.3.3.2 The Colombo Stock Exchange 2.3.3.3 Securities and Exchange Commission 2.3.3.4 The Sri Lanka Institute of Directors 2.3.3.5 The Institute of Chartered Accountants of Sri Lanka 2.3.3.6 The Central Bank of Sri Lanka (The Central Bank) 2.4 Women in Sri Lanka 2.4.1 The Traditional Social Status of the Sri Lankan Woman 2.4.2 The Changing Role of the Woman in Sri Lankan Society 2.5 Summary 3 The Board’s Role in Corporate Governance 3.1 Introduction 3.2 The Board as a Core Corporate Governance Organ 3.3 Agency Problems as a Consequence of Ineffective Board Monitoring 3.4 Rules on Board Composition as a Strategy to Mitigate Agency Problems 3.5 Summary 4 The Debate on Board Gender Diversity 4.1 Introduction 4.2 Board Gender Diversity as a Recurring Theme on Board Composition 4.3 A Global Snapshot of Board Gender Diversity 4.4 Rationales for Women on Boards 4.4.1 The Economic Rationale 4.4.1.1 The “Business Case” for Board Gender Diversity 4.4.1.2 Beyond the Traditional “Business Case” for Board Gender Diversity 4.4.2 The Social Case for Board Gender Diversity 4.5 Summary 5 Regulatory Approaches on Board Gender Diversity 5.1 Introduction 5.2 The Legal Regulatory Landscape on Board Gender Diversity 5.2.1 The Quota Approach 5.2.2 The Disclosure-Based Approach 5.3 The Way Forward to Increase Women on Boards: A Comparative Analysis of the Quota and Disclosure Approaches 5.4 Exploring the Adoption of a One-Size-Fits-All Model 5.5 Supplementing Legal Rules with Systemic Change 5.6 Summary 6 Research Methodology 6.1 Introduction 6.2 The Theoretical Perspective: The Socio-Legal Approach 6.2.1 The Historical Development of the Socio-Legal Approach 6.2.2 Application of the Socio-Legal Approach to the Study 6.2.2.1 Adopting Socio-Legal Thinking in Framing the Research Objectives 6.2.2.2 Closing the Gap Between Law in Books and Laws in Action 6.2.2.3 Adopting Socio-Legal Thinking in Framing Research Questions 6.2.2.4 The Impact of the Socio-Legal Approach on the Findings 6.2.3 Difficulties Encountered in Adopting the Socio-Legal Approach 6.3 Research Methods 6.3.1 Documentary Analysis 6.3.2 Using Interviews as a Research Method 6.3.2.1 Research Participants/Interviewees 6.3.2.2 The Interview Framework 6.3.2.3 Planning and Conducting the Interview 6.3.2.4 Conducting the Interview 6.3.2.5 Drawbacks of Interviews 6.4 Data Analysis: The Thematic Analysis Method 6.4.1 Braun and Clarke’s Six-Step Guide to Thematic Analysis 6.4.2 Application of Braun and Clarke’s Six-Step Approach 6.4.3 Drawbacks of Braun and Clarke’s Thematic Analysis Method 6.5 Summary 7 Exploring the Sri Lankan Perceptions on Introducing Board Gender Diversity Rules 7.1 Introduction 7.2 The Efforts to Improve Corporate Governance in Sri Lanka 7.2.1 The Influence of the IFIs on Corporate Governance Reform in Sri Lanka 7.2.2 Positive Progress on Board Composition Rules 7.3 Examining the Introduction of Board Gender Diversity Rules to Sri Lanka as a Tool to Promote Better Corporate Governance 7.3.1 Exploring the Sri Lankan Situation on Board Gender Diversity 7.3.2 Exploring the Benefits of Board Gender Diversity Rules to Sri Lankan Corporate Boards 7.3.2.1 Corporate Financial Performance or Board Effectiveness to Establish an Economic Rationale on Board Gender Diversity in Sri Lanka 7.3.3 Exploring Deeper into the Benefits of Board Effectiveness That Assist Sri Lankan Boards 7.3.3.1 Stricter Monitoring of Senior Management and Better Risk Management 7.3.3.2 Enhancement of Long-term Strategic Development and Adherence to Corporate Social Responsibility 7.3.3.3 Increase Participative and Collaborative Engagement in the Board 7.3.3.4 Improve Board Functionality and Diversity of Skills and Knowledge on the Board 7.3.3.5 A “Sum-up” on Establishing a Rationale Based on Board Effectiveness 7.4 Beyond the Economic Rationale: The Social Case for Introducing Board Gender Diversity to Sri Lanka 7.4.1 Sri Lankan Social Structure and Gender Inequality 7.4.1.1 The Traditional Social Setting of the Sri Lankan Woman 7.4.1.2 Measures to Change the Traditional Social and Cultural Beliefs in Relation to the Status of the Sri Lankan Woman 7.4.1.3 Board Gender Diversity Rules as a Tool to Address the Existing Barriers Preventing Sri Lankan Women’s Access to the Boardroom 7.5 The Suitable Legal Regulatory Framework for Adopting Board Gender Diversity Rules in Sri Lanka 7.5.1 Choosing Between Quotas and Disclosures in the Sri Lankan Context 7.5.1.1 Factors Influencing the Adoption of a Disclosure Approach as the Framework to Implement Board Gender Diversity Rules in Sri Lanka 7.5.1.2 Selecting the Type of Disclosure Rules on Board Gender Diversity to Adopt in Sri Lanka 7.5.1.3 Systematic Changes to Support the Disclosure Rules on Board Gender Diversity in Sri Lanka 7.6 Summary 8 Conclusion 8.1 Summary of the Study 8.2 Limitations 8.3 Future Research Paths 8.4 Concluding Comments Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 Appendix 8 Appendix 9 Appendix 10 Appendix 11 Appendix 12 Appendix 13 Bibliography Index