Abstract
This paper analyzes the determinants of women’s representation on boards of directors based on a panel of all privately owned or listed Danish firms with at least 50 employees observed during the period 1998–2010. We focus on the directors who are not elected by the employees and test three hypotheses on female board representation that we denote the female-led hypothesis, the tokenism hypothesis, and the pipeline hypothesis, respectively. We find evidence rejecting the female-led hypothesis. Firms with a female chairperson on the board of directors tend to have significantly fewer other non-employee-elected female board members. We also find clear evidence of a tokenism behavior in Danish companies. The likelihood of enlarging the share of non-employee-elected female board members is significantly smaller if one, two, or more women have sat on the board of directors. Finally, the pipeline hypothesis is partly confirmed. The relation between the female pipeline of potentially qualified directors and female directors is weaker than the similar relation for males. Our findings offer insights to policy makers interested in promoting gender diversity within boardrooms. Our empirical evidence suggests that an important way to increase the female proportion of non-employee-elected board members is that more women reach top executive positions.
Similar content being viewed by others
Notes
In Denmark, firms with more than 35 employees are obliged to have EEBM. The EEBMs are elected among the employees and may stem from all parts of the organization, including the lowest hierarchic levels, i.e., EEBM may be manual workers. Thus, EEBMs are very different from ‘insider board members’ in a US company who are either present or former executive officers in the company, see for instance Farrell and Hersch (2005).
In this study, we do not have access to newer data where register information on firm and employee level from Statistics Denmark is merged with the information on gender composition and size of corporate boards from the private database Experian.
The exact definition using Statistics Denmark's ‘DISCO-codes’ is CEO = Executive director (RAS-DISCO code 121, 1210). VP = Vice-President (DISCO 122, 123, 1221–1239). Pool of potentials = potential top executive. (First digit of DISCO code is 1 but not included in the groups of top or vice directors). In order to remove outliers or errors in the DISCO-codes, we restrict the CEO group to individuals who are observed with annual earnings in top 10 of the firm. The VP group is restricted to individuals who are observed among the top 25. The definition of the occupational groups and the sample selection in this study is different from the sample in Smith et al. (2013), mainly because we do not include companies with less than 50 employees in the present study when defining the group of potential top executives.
The data set used in Smith et al. (2013) includes more and smaller companies than the data set used in this study, and therefore the proportion of females among the CEOs is larger.
In this table, all industry dummies are grouped in service and non-service sectors for the sake of simplicity.
The ‘pipeline’ coefficient is largest for small- and medium-sized companies (50–99 and 100–499 employees which amounts to 89 % of all companies in the sample), see Appendix Table 14, while the coefficient is small and insignificant for firms with more than 499 employees. Part of the explanation for the low coefficient for large firms may be that the relatively few large Danish (most often publicly listed companies) companies often hire their board members from other countries, i.e., the national pipeline of qualified women may be less important for large Danish firms, see Erhvervsstyrelsen (2015).
Abbreviations
- BOD:
-
Boards of directors
- CEO:
-
Chief executive officer
- CFO:
-
Chief financial officer
- COO:
-
Chief operating officer
- ED:
-
Executive directors
- EEBMs:
-
Employee-elected board members
- FE:
-
Fixed-effects panel regression
- FTSE:
-
Financial times and the London stock exchange (UK stock index)
- NED:
-
Non-executive director
- NC:
-
Nomination committees
- POP:
-
Pool of potential executives
- RE:
-
Random-effects panel regression
- VP:
-
Vice-President of the board of directors
- WOCB:
-
Women on corporate boards
References
Adams, R. A., & Ferreira, D. (2007). A theory of friendly boards. The Journal of Finance, 62(1), 217–250.
Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94, 291–309.
Becker, G. S. (1957). The economics of discrimination. Chicago: The University of Chicago Press.
Bell, L. (2005). Women-led firms and the gender wage gap in top executive jobs, IZA DP no. 1689, Bonn.
Bilimoria, D. (2006). The relationship between woman corporate directors and women corporate officers. Journal of Managerial Issues, 18(1), 47–61.
Bjerk, D. (2008). Glass ceilings or sticky floors? Statistical discrimination in a dynamic model of hiring and promotion. The Economic Journal, 118, 961–982.
Burke, R. J. (1997a). Women directors: Selection, acceptance and benefits of board membership. Corporate Governance: An International Review, 5(3), 118–125.
Burke, R. J. (1997b). Women on corporate boards of directors: A needed resource. Journal of Business Ethics, 16(9), 909–915.
Catalyst. (2004). The bottom line: Connecting corporate performance and gender diversity. New York: Catalyst.
Catalyst. (2013). Women on board. Retrieved from http://www.catalyst.org/knowledge/women-boards.
De Cabo, M. R., Gimeno, R., & Nieto, M. J. (2012). Gender diversity on european banks’ boards of directors. Journal of Business Ethics, 109, 145–162.
Dunn, P. (2012). Breaking the boardroom gender barrier: The human capital of female corporate directors. Journal of Managerial Governance, 16, 557–570.
Erhvervsstyrelsen. (2015). Gender balance in the largest Danish companies (in Danish). Retrieved from https://erhvervsstyrelsen.dk/sites/default/files/media/koensfordeling_i_de_stoerste_danske_virksomheder_januar_2015.pdf.
EU Commission. (2014a). Database on gender equality in largest listed companies. Retrieved from http://ec.europa.eu/justice/gender-equality/files/documents/140303_factsheet_wob_en.pdf.
EU Commission. (2014b). Gender balance on corporate boards. Retrieved from http://ec.europa.eu/justice/gender-equality/files/documents/140303_factsheet_wob_en.pdf.
Farrell, K. A., & Hersch, P. L. (2005). Additions to corporate boards: The effect of gender. Journal of Corporate Finance, 11(1), 85–106.
Grosvold, J., & Brammer, S. (2011). National institutional systems as antecedents of female board representation: An empirical study. Corporate Governance: An International Review, 19(2), 116–135.
Grosvold, J., Brammer, S., & Rayton, B. (2007). Board diversity in the United Kingdom and Norway: An exploratory analysis. Business Ethics: A European Review, 16(4), 344–357.
Gupta, N., Smith, N., & Verner, M. (2008). The impact of Nordic Countries’ family-friendly policies on employment, wages, and children. Review of Economics of the Household, 6, 65–89.
Hillman, A. J., Cannella, A. A., & Harris, I. C. (2002). Women and racial minorities in the boardroom: How do directors differ? Journal of Management, 28(6), 747–763.
Hillman, A. J., Shropshire, C., & Cannella, A. A. (2007). Organizational predictors of women on corporate boards. Academy of Management Journal, 50(4), 941–952.
Huse, M., Nielsen, S., & Hagen, I. M. (2009). Women and employee-elected board members, and their contributions to board control tasks. Journal of Business Ethics, 89, 581–597.
Hyland, M. M., & Marcellino, P. A. (2002). Examining gender on corporate boards: A regional study. Corporate Governance: The International Journal of Business in Society, 2(4), 24–31.
Kaczmarek, S., Kimino, S., & Pye, A. (2012). Board task-related faultlines and firm performance: A decade of evidence. Corporate Governance: An International Review, 20(4), 337–351.
Kang, H., Cheng, M., & Gray, S. J. (2007). Corporate governance and board composition: Diversity and independence of Australian boards. Corporate Governance: An International Review, 15(2), 194–207.
Kanter, R. (1977). Men and women of the corporation. New York: Basic Books.
Nekhili, M., & Gatfaoui, H. (2013). Are demographic attributes and firm characteristics drivers of gender diversity? Investigating women’s positions on french boards of directors. Journal of Business Ethics, 118, 227–249.
Oakley, J. G. (2000). Gender-based barriers to senior management positions: Understanding the scarcity of female CEOs. Journal of Business Ethics, 27, 321–334.
Peterson, C. A., & Philpot, J. (2007). Women’s roles on U.S. fortune 500 boards: Director expertise and committee memberships. Journal of Business Ethics, 72, 177–196.
Phillips, D. J. (2005). Organizational genealogies and the persistence of gender inequality: The case of silicon valley law firms. Administrative Science Quarterly, 50, 440–472.
Ruigrok, W., Peck, S., Tacheva, S., Greve, P., & Hu, Y. (2006). The determinants and effects of board nomination committees. Journal of Management and Governance, 10(2), 119–148.
Schein, V. E. (1973). The relationship between sex role stereotypes and requisite management characteristics. Journal of Applied Psychology, 57(2), 95–100.
Sealy, R., Singh, V., & Vinnicombe, S. (2007). The female FTSE report 2007: A year of encouraging progress. Cranfield, UK: Cranfield School of Management.
Sheridan, A. (2002). What you know and who you know; successful women’s experiences of accessing board positions. Career Development International, 7, 203–210.
Sheridan, A., & Milgate, G. (2005). Accessing board positions: A comparison of female and male board members’ views. Corporate Governance: An International Review, 13, 847–855.
Singh, V., & Vinnicombe, S. (2004). Why so few women directors in top uk boardrooms? Evidence and theoretical explanations. Corporate Governance: An International Review, 12(4), 479–488.
Smith, N. (2014). Quota regulations of gender composition on boards of directors. CESifo DICE Report, 12(2), 42–48.
Smith, N., & Smith, V. (2015). Women in top management positions—why so few? And does it matter? A survey of the recent empirical results for Danish companies. Danish Journal of Management and Business, 79(1), 23–36.
Smith, N., Smith, V., & Verner, M. (2013). Why are so few females promoted into CEO and Vice-President positions? Danish empirical evidence 1997-2007. Industrial and Labor Relations Review, 66(2), 380–408.
Terjesen, S., Aguilera, R. V., & Lorenz, R. (2014). Legislating a woman’s seat on the board: Institutional factors driving gender quotas for boards of directors. Journal of Business Ethics, 128, 1–19.
Terjesen, S., Sealy, R., & Singh, V. (2009). Women directors on corporate boards: A review and research agenda. Corporate Governance: An International Review, 17(3), 320–337.
Wang, Y., & Clift, B. (2009). Is there a “business case” for board diversity? Pacific Accounting Review, 21(2), 88–103.
Acknowledgments
We thank Rafael Lalive for his valuable comments and suggestions. Pierpaolo Parrotta and Nina Smith gratefully acknowledge the financial support from the Carlsberg Foundation. Pierpaolo Parrotta also acknowledges the financial support from the Swiss National Centres of Competence in Research LIVES.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors hereby declare that they have no conflict of interest.
Rights and permissions
About this article
Cite this article
Smith, N., Parrotta, P. Why so Few Women on Boards of Directors? Empirical Evidence from Danish Companies in 1998–2010. J Bus Ethics 147, 445–467 (2018). https://doi.org/10.1007/s10551-015-2974-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-015-2974-9