Equality and diversity in the boardroom
Board diversity has increased in almost every country and every sector, progressing from 9.6% in 2010 to 12.7% at the end of 2013. Female participation in top-management (CEO and directors reporting to the CEO) stands at 12.9% at the end of 2013, but varies considerably from sector to sector and country to country. Countries where board quotas were enforced show among the biggest gaps between the level of representation of women in the board and in top management.
Regional differences in diversity, perhaps cultural in nature, are more striking than those at a sector level. There is also a positive correlation between market capitalisation of a company and the level of gender diversity at both the board level and in top management. Small company management tends to be less diverse. The increasing trend towards global business models among corporates and the fact that large market cap companies tend to be predominantly global should help close the gender gap.
Gender diversity
The participation of women in top management tends to be skewed towards areas of less influence and with lower promotion opportunities. The "Management Power Line" (Figure 1) shows the lowest female representation at the CEO level and growing gradually as we move from there toward Business Management and Operational roles, CFO and Strategy and finally Shared Services. We also find that female representation is higher in "New Economy" companies and in "Non-Manual Labour (mostly services) companies.
Companies displaying greater board gender diversity display excess stockmarket returns adjusted for sector bias. Companies with more than one woman on the board have returned a compound 3.7% a year over those that have none since 2005. The excess return has moderated since our initial report. Over the last two and a half years, the excess return is a compound 2.0% a year. We find also that companies with higher female representation at the board level or in top management exhibit higher returns on equity, higher valuations and also higher payout ratios.
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