GENDER DIVERSITY ON CORPORATE BOARDS IN TURKEY: COMBINING HARD AND SOFT LAW

Abstract

The underrepresentation of women on corporate boards has received increased attention in terms of corporate governance over the last decade. The necessity of gender diversity on corporate boards is mostly based on economic rationale which is insufficient due to two reasons; first, it is not always possible to find a correlation between female participation on boards and the interests of the shareholders, and second such a correlation for male members of the board is not sought. The economic rationale needs to be reinforced with an equality rationale which emphasis on women's rights to promote gender diversity on corporate boards. Equality rationale is precisely what corporate governance regulations can provide. It is debatable which type of regulation is the most effective among the strategies to increase the share of women on the boards. The regulations can be grouped under two broad types. The first includes the introduction of mandatory quota for women on boards, along with sanctions. The second approach is of a more voluntary character. The Corporate Governance Principles of Turkey, which regulates gender diversity on the corporate boards, have been drawn up with the latter being preferred. However, statistics show that Turkey is showing slow progress in this regard. This signals that soft law approach did not have the desired impact to increase the proportion of women in the corporate boards. This article aims to put forward the reasons for the slow progress and demonstrate alternative legal routes to current regulations to enhance more representation of women on the corporate boards in Turkey. The research shows that the reason of slow progress is incompatibility between the corporate governance regulation and its implementation in Turkey. On the one hand, regarding Turkish corporate culture, enforcing hard law will not reach the targeted result. But on the other hand, non-sanctioned voluntary method is not an effective way to act beyond intent. The finding of this research is that strengthened voluntary method must be applied in Turkey to increase the representation of women in board management.