The Whiteboard: Decoupling of ethnic and gender diversity reporting and practice in corporate Australia

Abstract

Diversity of company leadership is an important governance issue for corporations globally, yet the uneven treatment of diversity priorities remains a major challenge. We explore the extent and change over time of both gender and ethnic diversity in leadership and disclosure for Australia’s largest firms from 2005 to 2021. Using institutional theory, we compare the isomorphisms driving change, and examine the extent to which there is rhetorical decoupling between diversity disclosure and practice. Our analysis reveals a significant improvement in gender diversity over time but very little progress in the ethnic diversity of corporate leaders. We find a connection between diversity reporting and the appointment of female corporate leaders. However, there is a disconnection between public commitment to diversity and the appointment of non-white corporate leaders. A lack of regulation for diversity reporting contributes to this imbalance with different outcomes for gender and ethnic diversity as the result of different institutional isomorphisms. Our findings can inform policymakers and corporations, highlighting the importance of a range of institutional pressures that encourage the disclosure and practice of ethnic diversity in corporate leadership. JEL Classification: M14