Beyond the glass ceiling:
Does gender matter?
Renée Adams
University of New South Wales, FIRN, ECGI
Patricia Funk
Universidad Pompeu Fabra
Women in the boardroom-the facts
(2010 EOWA census)
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Women in the boardroom-the trends
• Explicit quotas:
– Norway: law since 2008 40% female directors in PLCs
– Spain: passed guidelines in 2007 to encourage companies
to increase the share of female directors to 40% by 2015
– France: proposal for law in 2010 that will impose 20%
gender quotas on boards of listed French companies within
3 years of the law's adoption and 40% quotas after 6 years
– Similar laws are currently under debate in Belgium, Italy
and the Netherlands
• Voluntary targets or disclosure requirements:
– Australia, Germany, U.K.
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Does gender diversity matter?
• Journal of Financial Economics “Women in the Boardroom
and their Impact on Governance and Performance” (with
Daniel Ferreira): YES!
– Women have better attendance behavior at board meetings
• Probability a director has attendance problems is reduced by 29.17% if
director is a woman
– Men have fewer attendance problems the more women are on the board
• This is not driven by an "age attraction" factor
– Women more likely to sit on audit, governance and nominating
committees (=monitoring committees)
– Diverse boards have higher sensitivity of CEO turnover to past
performance
– Diverse boards have more equity based pay for directors
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But is this a gender effect?
• Experimental research on gender suggests that
women and men are different
– Risk-taking (Gneezy & Croson, 2008, JEL,
“Gender Gaps in Preferences”)
– Performance in competitive situations (e.g.
Gneezy, Niederle, Rustichini, 2003, QJE)
– Social preferences (Gneezy & Croson, 2008, JEL,
“Gender Gaps in Preferences”)
– Corruption in policy (Duflo and Topalova, 2004)
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Does boardroom gender diversity matter?
• Selection based on taste: Only women who
have male characteristics want to have a highlevel position
• Selection due to promotion: Only women who
have male characteristics make it to the top
• Socialization/Learning: Women in competitive
environments aquire male characteristics,
which makes them indistinguishable from men
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Are female directors different from male directors?
• Metric = Schwartz human values (e.g. Schwartz,
2005)
– Transituational goals, varying in importance, that serve as
guiding principles in the life of a person or a group
– 10 motivationally distinct basic values that are recognized
across societies and that leave out no major distinct value
that are meaningful across societies
• These can be aggregated into 4 values
– Values shown to predict behavior (voting, deliquency,
cooperation, competition…) in more than 20 countries
• Metric = survey measure of risk-aversion
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Our answer: Yes!
• Moreover, the differences between male and female
directors are not always the typical differences in
values documented for men and women in
representative population samples
– Female directors ARE more self-transcendent (“otheroriented”) than male directors (a “typical” finding), BUT
ALSO
– Female directors are more open to change (less traditionoriented) than male directors (in contrast to the population),
and
– Female directors are more risk-loving than male directors!
(in contrast to findings for non-executives)
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Values and their relations
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Two basic conflicts
• Self-Enhancement versus Self-Transcendence
–
–
“Self-enhancement values focus on self-interests through
the pursuit of control over people and resources (power)
and of competence and success (achievement).
These values conflict with self-transcendence values that
reflect concern for others (benevolence) and for all
people and nature (universalism)”.
• Openness to Change versus Conservation
–
–
“Openness to change values reflect openness to what is
new: excitement and novelty (stimulation), and autonomy
of thought and action (self-direction).
These values conflict with conservation values tradition,
conformity and security.
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Data
•
2006 survey of ALL directors of listed Swedish
companies in 2005: 1372 board members and 468
CEOs and Vice-CEOs in 286 companies
– 17% female
•
•
126 responses (29.7% response rate) for CEOs
502 responses (36.6% response rate) for directors
– 17% female
•
•
European Social Survey and the World Value
survey
Boardex
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Gender gaps in the boardroom
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Representative Swedes vs. directors: ESS and our data
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Gender gaps in the population may
reverse in the boardroom
• Swedish women have higher benevolence,
universalism and tradition values
• Swedish women have lower power, achievement and
stimulation and conformity values
• The same achievement, power and benevolence
gender gaps also exist for directors
• But, female directors are less tradition, security,
conformity oriented and more stimulation oriented
• Gender gaps in the boardroom are atypical along the
conservation/openness to change axis
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Values and their relations
This is not too surprising...
This is surprising!
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Mechanism?
•
•
Evidence so far: Female directors have a
high taste for stimulation and a low valuation
of tradition/conformity/security
Is this driven by characteristics?
– For example, Betrand Goldin and Katz (2010)
show women drop out of labor force when they
have children
– If remaining women have fewer children and the
number of children is correlated with values, this
could explain our result
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Characteristics of directors as
compared to population
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Gender gaps due to characteristics?
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Gender gaps due to characteristics?
• Gender gaps in values not entirely explained
by differences in characteristics of men and
women
• Our results suggest that certain types of
women want to get to the top (e.g. the ones
with a strong taste for stimulation and a low
taste for tradition/conservation)
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Conclusions
• Even after controlling for observable
characteristics female and male
directors are different
– Boards do not appear to choose
women who look like men
– Being on a board does not seem to
make women exactly like men
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Implications
• These differences may lead to
differences in corporate outcomes
BUT not necessarily less risktaking!
– “Lehman Sisters” (with Vanitha
Ragunathan): bank boards with more
women had better performances during
the crisis, but also greater volatility in
stock returns
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Concerning quotas
• The larger the quota, the more “typical women” may
become directors
• Firms with quota women may have different
outcomes than firms with non-quota women
• “Is there a business case for female directors?
Evidence from the market reaction to mandatory
director appointment announcements” (with John
Knowland and Steve Grey):
– The market reacts more positively to the appointment of
female directors (even after controlling for characteristics),
– However, this effect decreases once pressure to appoint
women increases
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Final thoughts
• It is important not to generalize from the
population to the boardroom
• Diversity in the boardroom appears to matter
• It is not yet clear why
→ Care should be taken in designing regulation
around the issue of diversity
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Example: Power
Three statements measure how important power is:
1) It is important to him to be rich. He wants to have a lot of money and
expensive things
2) It is important to him to be in charge and tell others what to do. He
wants people to do what he says
3) He always wants to be the one who makes the decisions. He likes to be
the leader.
Answers: “Please mark in the box to the right how much this person in the
description is like you”.
Very much like me (1), Like me (2), Somewhat like me (3), A little like
me (4), not like me (5), not like me at all (6)
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Measure of Risk-Taking
We use a standard question from the literature:
Imagine you had won SEK 1,000,000 in a lottery. Almost
immediately after you collect, you receive the following
offer from a reputable bank: There is a chance to double
the money within two years. It is equally possible that
you could lose half of the money invested. Which amount
of SEK 1,000,000 would you invest: 1 (0 SEK), 2
(200,000 SEK), 3 (400,000 SEK), 4 (600,000 SEK), 5
(800,000 SEK), 6 (1,000,000 SEK)?
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