Companies that want to improve their performance should get women in the boardroom. This conclusion can be drawn from a study by the Complexity Science Hub Vienna (CSH), which examined the relationship between women on board and profitability using Japanese companies. As the analysis published in the International Review of Financial Analysis magazine shows, companies with female directors perform better.
The research is based on data from approximately 4,000 Japanese listed companies collected between 2004 and 2013. According to lead author Matthias Raddant of the CSH, this is one of the largest samples ever analyzed for developed economies.
The scientists not only looked at the relationship between economic performance and the proportion of women at management level, but also looked at the development of a group of female board members and their professional networks over the years – an aspect that was published in the journal “Empirical Economics”. .
The level of management of Japanese companies is very different from that in German-speaking countries, where there is usually a board of directors and a supervisory board. “In Japan, they have been guided by the American system since the 1990s and have only one corporate board responsible for the company’s long-term strategy,” explains Raddant. According to the research, this ‘board’ – hereinafter referred to as the ‘board’ – often consists of ten executives, plus two or three external parties. Some people are also active on the boards of various companies.
The proportion of women on the boards of the companies studied is low
The proportion of women on the boards of directors of the companies surveyed is low, even if it increased slightly over the 10-year observation period of the survey. “Even by 2022, the share of female board members in Japan will be just 8 percent,” Raddant said. That number would be well below North American and European companies, where nearly a third of board seats are already held by women.
Women support same-sex women in their careers
Although their numbers are still small, female board members have started to change their position in the board networks. There are said to be a relatively large number of women on several boards, “which means that they are increasingly becoming the center of attention”. According to the “Like and like gregarious” principle, women tend to have closer contact and support each other, the researchers point out. For example, the data shows that companies associated with female board activities are more likely to appoint women to leadership positions.
Earning more power in companies with women on their boards
However, women on the board also have tangible economic benefits: the analysis shows that companies with at least one female board member perform better in terms of profitability than companies without women on the board. However, this result was only significant in the last three years of the observation period.
The researchers think it probably has to do with the quality of management in general: “Companies with good governance are more profitable, and those companies may also be better at facilitating the hiring of female board members,” they write.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
