Abstract
This study aims to analyze the impact of women's presence on the board of directors on the outcomes of Spanish and Portuguese-listed firms over the third millennium. Based on a documental analysis of 44 publications, it is concluded that female directors positively affect the quality and transparency of the firm's reporting and compliance with the corporate governance codes. However, concerning financial outcomes, the literature does not robustly document the positive effects of such directors' characteristics on firm performance. Similar conclusions may be drawn for dividend and tax policies. These findings are consistent across different time frames of this millennium, indicating that they are not directly driven by gender quotas implementation. These results should interest Iberian governments, regulators, shareholders, investors, and financial markets.
TopIntroduction
Are scientific results of research based on gender diversity effects on Iberian-listed firms’ outcomes over this millennium supporting the gender quotas defenders? This investigation aims to find a compelling answer to this research question by conducting a systematic literature review related to this regional context published in recognized journals.
Historically, the research interest in this subject devoured from the social pressure of the most developed western societies related to promoting women’s equality rights in work-related issues. In the European context, some national governments have been answering to this social pressure by introducing hard (with penalties for those who do not comply with the law) or soft (long-term orientation goals without penalties) gender quota legislation, mainly for governmental and parliamentary structures, state-owned companies, and listed firms. According to European Union (2022), “hard” gender quotas applied to listed companies in Austria, Belgium, France, Germany, Greece, Italy, Portugal, and the Netherlands. Additionally, ten states have softer gender quota legislation that, in some cases, applies to listed companies (e.g., Spain) and in others not (e.g., Slovenia). A considerable number of countries still didn’t make important decisions on the subject (e.g., Bulgaria and Croatia).
Concerning the Iberian context, Spain was the first country to introduce gender quota legislation in the region. In 2007, the Spanish parliament approved the establishment of gender quotas by the Constitutional Act 3/2007. This law defined a long-term goal of 40% of women’s representation on the boards of public and private organizations. Despite the efforts made by governmental and regulatory authorities, this goal remains to be achieved 15 years later. Portugal only approved its gender equality law in 2017. With law 62/2017, the Portuguese parliament imposed a gender quota of 33% on the administration and supervisory boards of public companies and listed firms. Despite the law delay of around a decade compared to Spain, the target ratio in 2022 is almost achieved.1
Literature devoted to analyzing the long-term effects of gender quotas established by national authorities on listed companies is very scarce. In a recent systematic review, Yu and Madison (2021) identified only nine studies on this subject. Of those, eight were related to European companies (Nordic countries, France, Italy, and Spain), and only one to U.S. companies. Results demonstrate that the long-term effect of gender quota implementation in those countries was detrimental to firms’ accounting and market performance in 7 of the 9 studies. Soare et al. (2022) analyzed the effects of gender quota legislation in the Belgium context based on 23 performance indicators. The authors concluded that firms performed worse after this political event on 10 of the 23 indicators and found no significant change in the remaining 13. As such, this study found no significant positive effects of this event on companies’ performance. Lastly, Tapver et al. (2020) analyzed the female directors’ impact on commercial banks’ CSR disclosure. Using a sample of 285 commercial banks from 35 countries belonging to different word geographies, the authors concluded that those directors significantly contribute to banks’ CSR disclosure. Interestingly, results remain consistent for banks whose gender representation is under or above gender quotas, meaning that this effect is not gender quota contingent.
Key Terms in this Chapter
Corporate Diversity and Inclusion: Corporate diversity is when organizations intentionally employ a workforce of employees of varying characteristics (sexual orientation, gender, race, ethnicity, religion, age, physical abilities, political ideologies, or socioeconomic status). Inclusion is defined as “the achievement of a work environment in which all individuals are treated fairly and respectfully, have equal access to opportunities and resources, and can contribute fully to the organization's success.”
Corporate Governance: Corporate Governance refers to how companies are governed and for what purpose. Identifies who has power and accountability, and who makes decisions. A toolkit that enables management and the board to deal more effectively with the challenges of running a company. Corporate governance ensures that businesses have appropriate decision-making processes and controls in place to balance the interests of all stakeholders (shareholders, employees, suppliers, customers, and the community).
Gender quotas: Refers to a positive measurement instrument aimed at accelerating the achievement of gender-balanced participation and representation by establishing a defined proportion (percentage) or a number of places or seats to be filled by, or allocated to, women and/or men, generally under certain rules or criteria.
Innovation management and performance: Innovation management is the systematic process of organizing innovative practices throughout the enterprise. When leveraged effectively, innovation management can give rise to a creative culture where breakthrough ideas are generated continuingly It can also ensure complex, large-scale innovation objectives are broken down into manageable goals that various participant groups can focus on. Thus, innovation management leads to a performance based on innovative results and management practices.
Gender: Gender refers to the characteristics of women, men, girls, and boys that are socially constructed. This includes norms, behaviors, and roles associated with being a woman, man, girl, or boy, as well as relationships with each other. As a social construct, gender varies from society to society and can change over time.
Board of Directors: The board of directors of a public company is elected by shareholders. The board makes key decisions on issues such as mergers and dividends, hires senior managers, and sets their pay. Responsible for helping a corporation set broad goals, supporting senior management in pursuit of those goals, and ensuring the company has adequate, well-managed resources at its disposal.