Female Presence on Corporate Boards: A Multi-Country Study of Environmental Context

A growing body of ethics research investigates gender diversity and governance on corporate boards, at individual and firm levels, in single country studies. In this study, we explore the environmental context of female representation on corporate boards of directors, using data from 43 countries. We suggest that women’s representation on corporate boards may be shaped by the larger environment, including the social, political and economic structures of individual countries. We use logit regression to conduct our analysis. Our results indicate that countries with higher representation of women on boards are more likely to have women in senior management and more equal ratios of male to female pay. However, we find that countries with a longer tradition of women’s political representation are less likely to have high levels of female board representation.     

Appointing Women to Boards: Is There a Cultural Bias?

Companies that are serious about corporate governance and business ethics are turning their attention to gender diversity at the most senior levels of business (Institute of Business Ethics, Business Ethics Briefing 21:1, 2011). Board gender diversity has been the subject of several studies carried out by international organizations such as Catalyst (Increasing gender diversity on boards: Current index of formal approaches, 2012), the World Economic Forum (Hausmann et al., The global gender gap report, 2010), and the European Board Diversity Analysis (Is it getting easier to find women on European boards? 2010). They all lead to reports confirming the overall relatively low proportion of women on boards and the slow pace at which more women are being appointed. Furthermore, the proportion of women on corporate boards varies much across countries. Based on institutional theory, this study hypothesizes and tests whether this variation can be attributed to differences in cultural settings across countries. Our analysis of the representation of women on boards for 32 countries during 2010 reveals that two cultural characteristics are indeed associated with the observed differences. We use the cultural dimensions proposed by Hofstede (Culture’s consequences: International differences in work-related values, 1980) to measure this construct. Results show that countries which have the greatest tolerance for inequalities in the distribution of power and those that tend to value the role of men generally exhibit lower representations of women on boards.     

Board Gender Diversity: Challenges and Implications for Corporations in the East African Community

ABSTRACT

East African Community’s (EAC) corporations are required to follow a regional treaty of mainstreaming gender equality. This article discusses challenges encountered by corporate boards of the EAC’s corporations when adding women. Agency and resource dependence theories led the study, while a review of the literature was the methodology. We discuss the benefits of diverse boards and challenges faced when developing this diversity. We show how power distance, masculinity, and certainty avoidance prevent women from corporate boards. Furthermore, we discuss how social orientation and business environment impact women’s participation. The article discusses various strategies to be considered for increasing diversity.     

ROE as a performance measure in performance-vested stock option contracts in China

In this paper, we hand-collect the performance measures adopted in performance-vested stock option plans in China. We find that return on equity (ROE) is a widely used performance measure. Different from most of the other performance measures, ROE is affected by the number of shares outstanding. When executive compensation contracts are explicitly tied to ROE performance, in order to avoid the reduction in reported ROE through the issuance of additional common shares (i.e., ROE dilution), managers have an incentive to influence ROE performance through financing decisions. We find that managers are more likely to avoid ROE dilution related to debt-versus-equity choice when their performance-vested stock option plans are explicitly tied to ROE performance and when firms have a high level of access to bank loans. However, there is no such link for firms with a low level of access to bank loans. Our study shows that the association between executive compensation design and corporate financing decisions depends on the accessibility of bank loans, demonstrating the importance of institutional factors in China. The results hold after controlling for potential endogeneity in executive compensation and corporate financing decisions. Our study contributes to both the executive compensation and corporate finance literature.     

Strategic and Regulatory Approaches to Increasing Women in Leadership: Multilevel Targets and Mandatory Quotas as Levers for Cultural Change

While substantial evidence is emerging internationally of positive increases in the participation of women on company boards, there is less evidence of any significant change in the proportion of women in senior executive ranks. This paper describes evidence of positive changes in the number of women on boards in Australia. Unfortunately these changes are not mirrored in the senior executive ranks where the proportion of women remains consistently low. We explore some of the reasons for these disproportionate changes and examine the likely effect of the recent amendments to the Australian stock exchange’s corporate governance code designed to improve gender diversity both on boards and throughout organisations. Based on the early corporate response to these regulatory changes, it is interesting to consider whether Australia’s approach in promoting voluntary self-regulation at the corporate level may be as effective in the long run as the emerging trend in Europe to apply legislated quotas for female corporate board representation. Interview evidence is presented suggesting that the primary reasons for the lack of women in leadership are not simply lack of opportunity at the apex of the corporation, but issues at mid-management level that are unlikely to be resolved by mandatory board quotas. In some circumstances carefully monitored voluntary targets may be more effective at promoting cultural and strategic change at the heart of the corporation. In summary, mandatory quotas (set through hard law usually with sanctions for noncompliance) may achieve early and significant results in terms of female board representation. However, voluntary targets for women’s participation on boards and in executive ranks (proposed in soft regulation such as corporate governance codes and set as part of corporate strategy) may promote more effective cultural and practical change in support of greater representation of women in leadership.     

Earnings management and firms' investment behavior: The threshold effect of ROE

This paper, on the basis of a sample of Chinese listed firms, investigates the relationship between both real and accrual-based earnings management activities and firms' capital investment behavior. We apply the threshold model proposed by Hansen (1999) and find firms managing earnings can either over or underinvest, depending upon firms' return on equity (ROE) level. The study results show an inverted relationship between earnings management and firms' investment, which changes from negative to positive with ROE rising beyond certain threshold levels. We also find that the level of ROE affects whether managers use real and accrual manipulations jointly or as substitutes in affecting firms' investment. Our evidence is important because it sheds new light on the relationship between earnings management activities and firms' investment behavior by showing that ROE may act as an important determinant in this relationship. This finding has important implications for policymakers such as the Chinese Securities Regulatory Commission (CSRC) as it shows that the regulatory benchmarks they set may have a significant impact on firms' investment behavior.     

Why and how should SHE make her way into the family business boardroom?

The most successful and longest-enduring family firms are progressively encouraging the active presence of women on their corporate boards. Why is the presence of women on boards so important for family firms? And how can policy makers and controlling owners encourage the active presence of women on family business corporate boards? By integrating the literature on women in governance and the goals of family businesses, we take a step toward increasing shareholder awareness of the economic and noneconomic benefits that women can bring to the family business boardroom. Using theory and empirical evidence, we show that the presence of women on corporate boards can be instrumental for the controlling owners of a family business to achieve prosperity and success, to preserve family cohesion, and to improve the reputation of the family and business simultaneously. Furthermore, we discuss the socioemotional and economic ramifications of excluding women from the family business board of directors. We conclude with four practical recommendations for encouraging the active presence of women on family business boards.     

Gender Diversity on European Banks’ Boards of Directors

This article investigates the gender diversity of the corporate board of European Union banks. Employing a large sample of 612 European banks from 20 European countries, it identifies organizational characteristics that could be predictive of women??s presence on bank boards. We identify three factors that play a particularly important role in defining bank board gender diversity. First, the proportion of women on the board is higher for lower-risk banks. We argue that there may be some statistical discrimination behind this relation, although it could also be explained by a real risk-aversion hypothesis. Second, banks with larger boards have a higher proportion of women on their boards, which could be considered a signal of some kind of preference for homogeneity on small boards. Finally, banks that have a growth orientation are more prone to include women on their board, since they may be seen as providers of diverse external resources that are more valued by firms operating under critical circumstances.     

Women Board Directors: Characteristics of the Few

Appointment as a director of a company board often represents the pinnacle of a management career. Worldwide, it has been noted that very few women are appointed to the boards of directors of companies. Blame for the low numbers of women of company boards can be partly attributed to the widely publicized "glass ceiling". However, the very low representation of women on company boards requires further examination. This article reviews the current state of women's representation on boards of directors and summarizes the reasons as to why women are needed on company boards. Given that more women on boards are desirable, the article then describes how more women could be appointed to boards, and the actions that organizations and women could take to help increase the representation of women. Finally, the characteristics of those women that have succeeded in becoming members of company boards are described from an international perspective. Unfortunately, answers to the vexing question of whether these women have gained board directorships in their own right as extremely competent managers, or whether they are mere token female appointments in a traditional male dominated culture, remains elusive.     

Women on Corporate Boards of Directors and their Influence on Corporate Philanthropy

This study examined the relationship between the proportion of women serving on firms' boards of directors and the extent to which these same firms engaged in charitable giving activities. Using a sample of 185 Fortune500 firms for the 1991–1994 time period, the results provide strong support for the notion that firms having a higher proportion of women serving on their boards do engage in charitable giving to a greater extent than firms having a lower proportion of women serving on their boards. Further, the results suggest a link between the percentage of women on boards and firm philanthropy in the areas of community service and the arts, but found no link between women boardmembers and firm giving to support education or public policy issues. The implications of the findings and some areas for future research are discussed.     

Investor reaction to women directors

Existing studies on women directorships present equivocal results on the association between appointing women directors and firm performance. These studies tend to focus on western countries and largely ignore investors' reactions to such appointments. This paper applies the financial event study method and finds that investors generally respond positively to the appointment of women directors in Singaporean firms. Regression analyses also reveal that investors are most receptive when the women are independent directors and are least receptive when the directors assume the CEO role. This study not only tests the theory of gender diversity in an Asian context but also examines whether investors react systematically to the different positions that women directors hold on corporate boards, a question that has received little attention in prior studies.     

Women Directors on Corporate Boards: From Tokenism to Critical Mass

Academic debate on the strategic importance of women corporate directors is widely recognized and still open. However, most corporate boards have only one woman director or a small minority of women directors. Therefore they can still be considered as tokens. This article addresses the following question: does an increased number of women corporate boards result in a build up of critical mass that substantially contributes to firm innovation? The aim is to test if ‘at least three women’ could constitute the desired critical mass by identifying different minorities of women directors (one woman, two women and at least three women). Tests are conducted on a sample of 317 Norwegian firms. The results suggest that attaining critical mass – going from one or two women (a few tokens) to at least three women (consistent minority) – makes it possible to enhance the level of firm innovation. Moreover, the results show that the relationship between the critical mass of women directors and the level of firm innovation is mediated by board strategic tasks. Implications for both theory and practice, and future research directions are discussed.     

Does having women managers lead to increased gender equality practices in corporate social responsibility?

There is increasing interest in determining what impact having women in management positions may have on corporate social responsibility (CSR) initiatives. Various authors suggest that gender equality practices should be factored into the broader framework of CSR. This paper examines how the presence of women on corporate boards, in top and middle management and as heads of CSR departments, influences gender equality practices in the field of CSR. Using information collected from companies that have signed up to Women's Empowerment Principles in Spain, we show that the presence of women in the aforesaid posts has a positive impact on CSR activities with gender equality objectives. We thus supplement the justice, business and moral arguments with further arguments in support of the incorporation of women into not only corporate boards but all management positions. Finally, we provide a view of how gender equality can be included in the broader framework of CSR.     

Board structure and role of monitoring committees

Regulators and researchers alike have focused significant attention on the structure of the corporate board. In general, the results of prior empirical studies suggest that larger boards are costly to firms because of communication and co-ordination problems. How firms use committees to mitigate these costs, however, has not received as much attention. Since boards delegate authority for specific tasks to monitoring committees with independent directors, we re-examine the impact of board structure on firm performance by specifically focusing on the number of monitoring committees. Using ROA and EVA, we find that board size is positively associated with firm performance when firms use more than three monitoring committees. We also find that the previously documented negative association between board size and Tobin's Q disappears when a firm uses more than three monitoring committees. Overall, the results suggest that firms use monitoring committees to mitigate the costs associated with larger boards.     

Women and corporate boards of directors: The promise of increased, and substantive, participation in the post Sarbanes-Oxley era

Few aspects of corporate board diversity have generated the focused attention that the participation, position, and promise of women's service on the board has generated, especially in recent years. Of particular note is the extent to which women serve on large firm boards of directors (e.g., Fortune 500 firms). Increases in levels of participation have been described as glacial. While critics decry the level of participation of women on large-scale corporate boards, careful scrutiny suggests substantial progress. Concurrent with steady increases in the overall participation of women on corporate boards are increases in their presence on key board committees. Importantly, women's leadership of key board committees and their service as lead directors has improved in parallel with increases in their board memberships. These increases are particularly noteworthy in the post Sarbanes-Oxley (SOX) period. Such trends suggest the continued progress of women in assuming prominent positions in the corporate governance landscape, and provide evidence that the increasingly challenging environment in the post-SOX era has not attenuated the gains noted in the pre-SOX period.     

Women on the Board and Managers’ Pay: Evidence from Spain

The current literature shows great interest in the issue of gender diversity on boards of directors. Some studies have hypothesized a direct relationship between diversity and the value of the firm, but not many examine the intermediate mechanisms that may exert an influence on such relationships. We employ two stages of GMM estimation methodology to exhibit evidences of the relationship between gender diversity and compensation of top managers in the Spanish context. Results show that gender diversity positively affects the effectiveness of boards—in terms of composition, structure, size and functioning—influencing a proper design of top managers compensation linked to company performance. Evidences suggest that legislative actions aimed at increasing the presence of women on boards of directors are justified not only for ethical reasons, but also for reasons of economic efficiency.     

Gender Diversity in the Governance of Sport Associations: The Sydney Scoreboard Global Index of Participation

This paper examines gender diversity in sport governance globally. Theoretically, the study draws on gender dynamics in organisations, in particular on Kanter’s concepts of gender ratios and critical mass. An audit of the gender ratio on boards of National Sport Organisations (n = 1,600) was conducted in 45 countries. Data were collected through the Sydney Scoreboard, an interactive website that tracks women’s presence on sport boards internationally. Findings show that women remain under-represented on three key indicators: as board directors (global mean 19.7 %), board chairs (10.8 %) and chief executives (16.3 %). Few countries have achieved a critical mass of 30 % representation and no continent has achieved the critical mass on any of the three indicators. Women’s under-representation in sport governance is due to complex gender dynamics. Gender diversity on sport boards is associated with four interwoven dimensions of gender relations: production, power, emotion and symbolism. The combination of the four dimensions produces an environment that may or may not be conducive to gender diversity.     

Corporate governance and firm performance in emerging markets: Evidence from Turkey

This is a study of the relationship between context, internal corporate governance and firm performance, looking at the case of Turkey, an exemplar of family capitalism. We found more concentrated ownership, often in the hands of families, led to firms performing better; concentrated ownership means that controlling families bear more of the risks of poor performance. Less predictably, given that the institutional environment is so well attuned to family ownership, we found that mechanisms that accord room for a greater range of voices and interests within and beyond families – larger boards and foreign ownership stakes – seem to also make for positive performance effects. We also noted that increase in cross ownership did not influence market performance, but was negatively associated with accounting performance. Conversely, we found that a higher proportion of family members on boards had no discernable effect on performance. Our findings provide further insights on the relationship between the type of institutions encountered in many emerging markets, internal corporate governance configurations and firm performance.     

Are Demographic Attributes and Firm Characteristics Drivers of Gender Diversity? Investigating Women’s Positions on French Boards of Directors

In this article, we examine the factors determining the representation of women on boards of directors by considering three main questions. The first question deals with the relationship between characteristics of ownership and governance on one side, and female directorship on the other. The second major question concerns the demographic attributes of women directors, such as nationality, foreign experience, educational level, business expertise, and connections to external sources. The third important question refers to women in senior positions on French boards (e.g., as independent members or board subcommittee members) in relation to firm characteristics and women’s demographic attributes. Our study focuses on French large- and mid-capitalized companies belonging to the SBF120 stock market index during a 5-year period running from 2000 to 2004. First, our results give evidence that the appointment of women directors is strongly related to family ownership and board or firm size. Second, the appointment of women directors is related to their professional services, valuable skills, and network links. Furthermore, we show that women face a double glass-ceiling problem, and note that French firms rely more on the demographic attributes of their women directors when they are appointed to senior board positions. Our study sheds light on issues concerning the law that comes into force in 2016, which imposes quotas of women members on boards of directors in French companies.     

Commitment of independent and institutional women directors to corporate social responsibility reporting

This paper examines how independent and institutional women directors on boards affect corporate social responsibility (hereafter CSR) reporting. Most of the previous empirical evidence has shown a linear association between female directors and CSR disclosure, but to the best of our knowledge, no research has investigated the individual effect of independent and institutional female directors on CSR reporting. Therefore, the analysis of how the disclosure of CSR information is affected by independent and institutional women directors in a separate way merits our attention. Thus, we posit that there is a nonlinear association, concretely quadratic, between independent and institutional female directors on boards and CSR reporting. Our results demonstrate that, in line with the monitoring hypothesis, as the presence of independent and institutional women directors on boards increases, the CSR disclosure improves, but when their presence on boards reaches a tipping point (20.47% and 13.32%, respectively), CSR reporting decreases, which is consistent with the collusion hypothesis. This research contributes to the existing literature on the relationship between board gender diversity and CSR disclosure by suggesting that board structures formed by institutional and independent female directors have an effect on CSR reporting. Hence, female directors play a relevant role on boards since they may influence the CSR disclosure.