Diverse boards tied to fewer financial 'irregularities,' Canadian study finds — Financial Post

Andrew MacDougall

Feb 5, 2020

Studies that reinforce the belief that “diverse groups make better decisions support a shift that is already under way at companies due to legislative change and the views of institutional investors,” Osler partner Andrew MacDougall tells Financial Post. In her article, author Barbara Schecter examines a study by the University of Toronto that revealed companies with diverse boards are less prone to financial restatements and fraud. More than 6,000 companies listed in the U.S. (including Canadian firms) were studied by U of T, with gender being the key factor that was looked at.  Andrew, a Corporate Governance expert and Co-Chair of Osler’s Executive Compensation Group, explains how beginning this year, companies governed by the Canada Business Corporations Act must disclose their board representation in terms of women, visible minorities, Indigenous people and persons with disabilities.

“I am excited to see what is disclosed,” Andrew tells the Financial Post. “Not only will that provide a window into whether the push to include more women in leadership roles over the last several years has trickled down to venture issuers … but it will provide data about other diversity metrics that has not been previously available.”

Andrew also says that he is a “big fan” of the Canadian “comply or explain” model. He says it “can encourage change while avoiding the risk of unintended consequences brought on by more rigid compliance rules” as seen elsewhere.

“However,” Andrew tells Financial Post, “I am on record as advocating for the use of a minimum quota of at least one woman on each TSX company board (that) has four or more directors, in order to accelerate change.”

You can read Osler’s 2019 Diversity Disclosure Practices report [PDF], which was co-authored by Andrew, for a snapshot on the representation of women in leadership roles in corporate Canada.   

For more information on the U of T study, read author Barbara Schecter’s article “Diverse boards tied to fewer ‘irregularities,’ Canadian study finds” in the Financial Post.