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CalPERS And CalSTRS: Moving Beyond ‘Male, Pale, Stale’

Publication Date: 
September 17, 2009
Capitol Weekly
Ed Mendel

The conference, "Diversity on Corporate Boards: When Difference Makes a Difference," is highlighted in this article in Capitol Weekly. The event was sponsered by CalPERS, CalSTRS, Stanford Law School, and The Rock Center for Corporate Governance. Professor Joseph Grundfest, Professor Deborah Rhode and Amanda Packel participated in the conference and are quoted in the article:

California’s two big public pension funds, CalPERS and CalSTRS, are taking steps to break up the old-boy club at the top of corporations, pushing for more women and minority directors on boards some say tend to be “male, pale and stale.”

For several decades the pension funds, sometimes working with other institutional investors, have used their clout as major shareholders to push for reforms in corporate “governance,” usually with the broad goal of increasing the value of their holdings.

CalPERS famously screens hundreds of companies before placing five on its annual “focus list” targeted for management improvement, producing on average increased performance, that some studies have called the “CalPERS effect.”


The conference, “Diversity on Corporate Boards: When Difference Makes a Difference,” was sponsored by CalPERS, CalSTRS, Stanford Law School and The Rock Center for Corporate Governance.


A paper done for the conference by Deborah Rhode and Amanda Packel, both of the Stanford Center for the Legal Profession, looked at the “cottage industry” of studies done on corporate board diversity by dozens of researchers.

“In sum, the empirical research on the effect of board diversity on firm performance is inconclusive, as the results are highly dependent on methodology,” said the Rhode-Packel paper.

The moderator of the final panel, Joseph Grundfest, a Stanford law and business professor, warned against emphasizing inconclusive statistics about improved financial performance to make the case for gender and minority board diversity.

“There is other literature out there suggesting that other forms of diversification, such as adding financial experts, are more likely to lead to a stock price return,” he said.

Grundfest said gender and minority diversity on boards should be pursued for a number of reasons — among them reflecting the workforce, a broader range of viewpoints and a better chance of understanding consumers, markets and suppliers.