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The Influence of Corporate Elites on Women on Supervisory Boards: Female Directors’ Inclusion in Germany

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Abstract

Although we can observe noticeable progress in gender diversity on corporate boards, these boards remain far from gender balanced. Our paper builds on social identity theory to examine the impact of corporate elites—men and women who sit on multiple corporate boards—on board diversity. We extend the main argument of social identity theory concerning favouritism based on homophily by suggesting that boards with men with multiple appointments are unwilling to include female board members to protect the monopoly value generated by their elite status. The empirical analysis, based on DAX 30 firms in the period of 2010–2015, shows that the presence of multi-board men is negatively associated with women’s participation, while the presence of multi-board women and other women on management boards is positively related to gender diversity on boards. Furthermore, robustness tests support and confirm our conclusion that multi-board men have a significant association with board diversity, even with small size (i.e. 1 or 2). Additionally, we find a significant effect arising from pressure related to the introduction of gender quotas in Germany, effective in 2016, indicating the effectiveness of gender quota policies for board gender diversity.

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Notes

  1. Institutional Shareholder Services Inc. (ISS) is the world’s leading provider of corporate governance and responsible investment solutions.

  2. Bonacich power (beta centrality) centrality, another centrality measure in social network analysis, is also used for robustness checks (Bonacich 1987).

  3. The reason why we have only 170 observations is the following: ROA data are missing for Commerzbank AG in 2010 and 2013, for Deutsche Bank AG in 2015 and for Fresenius Medical Care AG and Co KGaA in 2013 (altogether 4 missing observations). Further, foreign sales data are missing for Linde AG for all the sample years (altogether 6 missing observations). In total, 10 observations out of 180 are missing.

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Acknowledgements

We are grateful to Associate Editor Alexander Newman for his guidance throughout the review process as well as to the two anonymous reviewers for their constructive and helpful comments. We also wish to acknowledge the feedback we received on earlier versions of this work from the members of the EBS Business School’s writing workshop.

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Authors and Affiliations

  1. Department of Management and Economics, EBS Business School, Rheingaustraße 1, 65375, Oestrich-Winkel, Germany

    Jie Huang & Marjo-Riitta Diehl

  2. Department of Finance, EBS Business School, Gustav-Stresemann-Ring 3, 65189, Wiesbaden, Germany

    Sandra Paterlini

  3. Department of Management and Economics, University of Trento, Trento, Italy

    Sandra Paterlini

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  1. Jie Huang
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Correspondence to Marjo-Riitta Diehl.

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Appendices

Appendices

Appendix A1: Summary Statistics for 160 German Firms in 2017

Variable

Mean

Median

SD

Min

Max

Board diversity (Blau)

0.32

0.38

0.15

0.00

0.50

No. of multi-board men

1.17

1.00

1.46

0.00

6.00

No. of multi-board women

0.37

0.00

0.67

0.00

3.00

Men’s average degree

12.57

11.00

7.45

2.00

33.14

Firm size

36.52

7.44

83.99

0.00

626.72

EBIT

986.43

186.19

2292.90

− 4893.00

12893.00

ROA

5.31

5.32

5.59

− 14.78

25.38

Foreign sales to total sales

57.57

56.32

96.75

0.00

1159.01

Board size

10.87

12.00

5.22

3.00

21.00

Appendix A2: Regression Results of the 160 Largest German Firms in 2017

 

(1)

(2)

(3)

(4)

No. of multi-board men

 

− 0.353** (0.144)

− 0.326** (0.143)

− 0.335** (0.141)

No. of multi-board women

  

0.162* (0.086)

0.176** (0.085)

Top 100 (0/1)

   

0.383** (0.165)

Men’s average degree

0.322** (0.154)

0.679*** (0.210)

0.610*** (0.211)

0.614*** (0.208)

Firm size

− 0.005 (0.099)

0.000 (0.097)

0.040 (0.098)

− 0.010 (0.099)

EBIT

− 0.026 (0.094)

0.048 (0.097)

− 0.010 (0.101)

− 0.034 (0.100)

ROA

0.034 (0.079)

0.008 (0.079)

0.021 (0.078)

0.023 (0.077)

Foreign sales to total sales

0.129* (0.077)

0.133* (0.075)

0.129* (0.075)

0.110 (0.074)

Board size

0.186 (0.152)

0.061 (0.158)

0.039 (0.157)

0.011 (0.155)

Constant

− 0.004 (0.075)

0.000 (0.073)

− 0.003 (0.073)

− 0.240* (0.125)

Observations

146a

146

146

146

R 2

0.234

0.266

0.285

0.312

  1. Standard errors in parentheses
  2. ***p < 0.01; **p < 0.05; *p < 0.1
  3. aWe have 14 missing observations due to incomplete information about ROA and foreign sales to total sales

Appendix A3: Dummies for the Number of Multi-board Men (160 Firms in 2017)

 

(1)

(2)

(3)

(4)

(5)

Dum0

− 0.324* (0.192)

    

Dum1

 

− 0.405 (0.291)

   

Dum2

  

− 0.405 (0.291)

  

Dum3

   

− 0.405 (0.291)

 

Dum4

    

− 0.239 (0.315)

Dum5

     

No. of multi-board women

0.007 (0.103)

0.021 (0.102)

0.021 (0.102)

0.021 (0.102)

0.020 (0.103)

Men’s average degree

0.427** (0.178)

0.456** (0.203)

0.456** (0.203)

0.456** (0.203)

0.322* (0.169)

Constant

0.177 (0.131)

0.110 (0.111)

0.110 (0.111)

0.110 (0.111)

0.030 (0.087)

Observations

146

146

146

146

146

R 2

0.309

0.305

0.305

0.305

0.298

  1. Dum(x) is the dummy variable for which the boards with fewer than x multi-board men are coded as 0, and others are coded as 1
  2. Standard errors in parentheses
  3. ***p < 0.01; **p < 0.05; *p < 0.1

Appendix A4: The List of DAX30 Companies

No.

Company name

1

Adidas AG

2

Allianz SE

3

BASF SE

4

Bayer AG

5

Bayerische Motoren Werke AG

6

Beiersdorf AG

7

Commerzbank AG

8

Continental AG

9

Daimler AG

10

Deutsche Bank AG

11

Deutsche Boerse AG

12

Deutsche Lufthansa AG

13

Deutsche Post AG

14

Deutsche Telekom AG

15

E.ON SE

16

Fresenius Medical Care AG and Co KGaA

17

Fresenius SE and Co KGaA

18

Heidelbergcement AG

19

Henkel and Co KGaA AG

20

Infineon Technologies AG

21

KandS AG

22

Lanxess AG

23

Linde AG

24

Merck KGaA

25

Muenchener Rueckversicherungs Gesellschaft in Muenchen AG

26

RWE AG

27

SAP SE

28

Siemens AG

29

ThyssenKrupp AG

30

Volkswagen AG

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Huang, J., Diehl, MR. & Paterlini, S. The Influence of Corporate Elites on Women on Supervisory Boards: Female Directors’ Inclusion in Germany. J Bus Ethics 165, 347–364 (2020). https://doi.org/10.1007/s10551-019-04119-6

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