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Gender Diversity on European Banks’ Boards of Directors

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Abstract

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.

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Notes

  1. Terjesen et al. (2009) review the theoretical and empirical research on the issue of female directors in the boardroom. The predominant perspectives they examine are human and social capital theories and gender schemas at the individual level; social identity, token, and social networks theories at the board level; resource dependency, institution, and agency theories at the firm level; and institutional, critical, and political theories at the environmental level.

  2. The term glass ceiling is thought to have first been used by two women at Hewlett-Packard in 1979, Katherine Lawrence and Marianne Schreiber, to describe how there seemed to be a clear path of promotion on the surface but, in fact, women hit a point beyond which they were unable to progress. Later, the term was used in a March 1984 Adweek article by Gay Bryant. The term glass ceiling became a permanent part of the American lexicon due to a subsequent article in the Wall Street Journal on March 24, 1986, by Carol Hymowitz and Timothy Schellhardt.

  3. Bankscope is a financial database covering 10,500 world banks. It offers subscribers data on up to 8 years of detailed spreadsheet information, compiled by Fitch International Bank Credit Analysis mostly from the balance sheets, income statements, and applicable notes found in audited annual reports. It also includes data details on ownership, produced by Bureau Van Dijk, such as lists of shareholders and banking subsidiaries.

  4. A total of 21 are public or government-controlled banks, nine of which are part of the Nordea Group. We have found no statistically significant relationship of this characteristic and the proportion of female directors.

  5. The references categories were selected as those with the highest proportion in the sample.

  6. Appendix shows the same descriptive analysis, but cross-tabulated by bank type and the bank’s listed character.

  7. One of the major drawbacks of Poisson modeling is that this statistical distribution implies that the mean and variance of the dependent variable must be equal. In our case, the sample has a mean number of women on the boards of 0.9, while the variance is 1.6. This overdispersion (variance greater than the mean) may imply that the model is unable to capture the real distribution of observations. This may be caused by omitted variables or because another statistical distribution is more adequate for modeling the behavior shown by the observations (zero-inflated Poisson, negative binomial regression, and zero-inflated negative binomial models). Nevertheless, once the full model is estimated, all alternative models are rejected against the Poisson model, indicating that the overdispersion has been overcome.

  8. We consider as a base case a German commercial bank that is not listed, with 12 board directors, where the financial variables are equivalent to the median values of the whole sample.

  9. Tokenism in this context implies that a female director is added to the board not for her professional quality but only as a symbol, because of her gender, since the board can thus send a message that it respects equality targets.

Abbreviations

CEO:

Chief executive officer

EU25:

European Union member countries excluding Romania and Bulgaria that entered in 2007

EPWN:

European Professional Women’s Network

FTSE:

Financial Times Stock Exchange Index

LR:

Likelihood ratio

M&As:

Mergers and acquisitions

ROAA:

Return on Average Assets

th.:

Thousand

USD:

US dollars

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Acknowledgments

Authors are very thankful to the editor and the anonymous referees, as well as to Ignacio Hernando, Jens Haggendorff, Juan Nave, and Diego Ruiz-Hernández for their comments and support. Authors also thank the assistants to the seminars of CNMV, CUNEF, ICADE, and Copenhagen Business School as well as the conferences on Feminist Economics, European Consortium for Political Research and Encuentro de Economía Aplicada for their comments and suggestions. The authors acknowledge financial support from the Spanish Ministerio de Ciencia e Innovación (project ECO-2009/13616).

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Authors and Affiliations

  1. Universidad CEU San Pablo, Julián Romea 23, 28003, Madrid, Spain

    Ruth Mateos de Cabo

  2. CUNEF (Universidad Complutense de Madrid), Serrano Anguita 9, 28004, Madrid, Spain

    Ruth Mateos de Cabo, Ricardo Gimeno & María J. Nieto

  3. Banco de España, Alcalá 48, 28014, Madrid, Spain

    Ricardo Gimeno & María J. Nieto

  4. Universidad Pontificia Comillas (ICADE), Alberto Aguilera 23, 28015, Madrid, Spain

    Ricardo Gimeno

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  1. Ruth Mateos de Cabo
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  2. Ricardo Gimeno
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  3. María J. Nieto
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Correspondence to Ricardo Gimeno.

Appendix

Appendix

See Table 6.

Table 6 Summary statistics cross-tabulated by bank type and the bank’s listed character
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Mateos de Cabo, R., Gimeno, R. & Nieto, M.J. Gender Diversity on European Banks’ Boards of Directors. J Bus Ethics 109, 145–162 (2012). https://doi.org/10.1007/s10551-011-1112-6

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