Norway was the first country to introduce a mandatory gender quota for the board of directors. The requirement to have at least 40% of directorsof either gender on the board for corporations (ASA firms) was announced in 2004. Given the small and declining number of ASA firms, and the easy availability of qualified candidates, the impact of the reform seems to have been limited.
Where are we 20 years after the initial gender balance rule?
The 2004 gender balance rule required the proportion of women on board to be at least 40%. The requirement was only applied to corporations (ASA firms), which are a small fraction of Norwegian firms. If we look at the universe of limited liability firms in Norway over the past 20 years, it appears the increase in the proportion of women on board has stalled at a level between 25% and 30%.
The 2004 gender balance requirement applied to corporations (ASA firms), which are among the largest firms in the country. The requirement is now being expanded to other medium and large firms.
How important is this change? How far are non-ASA firms from the target, and are there differences between large and small firms?
The graph below looks at limited liability firms in 2023 and groups them in size deciles based on revenues, with 1 being the smallest and 10 being the largest.
The results show that the proportion of women on board is lowest among the top 2 deciles, and among the largest 10% of the firms it is as low as 20%.
The new requirements will affect the firms at the larger end of the distribution - where there also seems to be the strongest need for change.
All listed firms have to be corporations, so listed firms were subject to the gender balance rule. In general, large firms tend to have the lowest proportion of women on board, so the gender balance rule had a large impact on the board composition of listed firms, as shown below.
Note: Large firms are firms with a turnover of at least 100 million kroner and at least 100 employees. The proportion for listed firms is slightly below 40% because we consider the boards of the controlling companies, which may be private.