Women on Boards in Italy Magda Bianco, Angela Ciavarella, Rossella - - PowerPoint PPT Presentation

Women on Boards in Italy

Magda Bianco, Angela Ciavarella, Rossella Signoretti

Banca d’Italia, Consob

Workshop on Diversity in Boards – De Nederlandsche Bank Amsterdam, 19 December 2013

Outline

• 1. Literature and motivation
• 2. Women and the traditional features of the

Italian market

 Which companies and which women?

• 3. Determinants of women representation
• 4. Some suggestions about effects

 Possible recurring relationships between women and governance-related outcomes

• 5. Conclusions and future work

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• 1. Literature and motivation (1/3)
• Traditionally, very limited women representation in Italian

corporate boards

– Far behind other countries

• However the number of women directors has been

increasing, especially in recent years

• In July 2011 the law on quotas passed

– Requiring that in listed companies the less represented gender holds at least one third of board seats (one fifth for the first term) – Sunset clause: 3 board terms (9 years) – Applying to board nominations following August 2012

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• Relatively large literature on beneficial effects of diversity

– Resource dependence – Agency theory

• Empirical analysis ambiguous

– Benefits of diversity on some governance-related outcome have been demonstrated

 Pay-for-performance, conflict of interests, board attendance

– Mixed evidence on the effects on performance

 Either positive or negative or variable with firm’s complexity

• Limitations

– Concerns about endogeneity and reverse causality make it

• ften difficult to interpret results as causal relationship

– Women rarely reach a critical mass, sufficient for expecting them to exert an effect

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• 1. Literature and motivation (2/3)

Women on Boards in Italy – DNB Amsterdam, 19 December 2013

 In our paper

• given the limited number of seats held by women, very

difficult to evaluate effects

• but knowledge of phenomenon should drive future

evaluation of effects and policy implications

• Hence here we aim at understanding

– Who are the women on Italian boards – Why are they on boards

• The analysis covers the boards of Italian listed companies

in the period 2008-2010 (before quotas regulation)

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• 1. Literature and motivation (3/3)

Women on Boards in Italy – DNB Amsterdam, 19 December 2013

• 2. Which companies?
• At a first glance, women are more frequently

appointed in:

– smaller companies – consumer sector and ITC

• As for the ownership and control structure summary

statistics show that women are common in:

– Single-controlled companies

– rather than coalitions and widely-held

– Family-controlled companies

– on average 7,6% of board seats held by women – women sit in nearly half of family firms

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• 2. Which women?
• We classify women directors according to their affiliation

with the controlling agent and education (simple proxy)

• 56% of women have family links with the controlling agent
• As compared to men, women are on average:

– more frequently executive rather than independent – less frequently appointed in board committees

• Among women:

– graduation is more common in the non-family group (93% vs 61%) – only a minority is independent (22%), being the majority executive or non executive (especially family) – interlocking (no. of board seats) is higher in the family group

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• 3. Determinants: hypotheses

We expect a role of

• Firm’s characteristics  size (+), industry (+ consumer)

– Common results of gender diversity literature – While also controlling for ‘inertia’ (age, i.e. since going public) and performance (Tobin’s Q)

• Ownership and control  dispersed ownership (+),

family (+), institutional investors (+)

– On the one hand, dispersed and institutional shareholders might have a preference for diversity – On the other hand, family-controlled Italian listed companies may be more willing to appoint family members

• Board  size (+), age (-), independence (+)

– Might capture how diversity-oriented a company is

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• Object  We investigate the drivers of women presence
• verall and in the sub-groups of family and non family

female directors

• Regressions  the dependent variable is whether at

least one female/ family female or non-family female director sits on the board. We perform both:

• Probit regressions
• Linear probability (OLS) models with firm fixed effects (to

address endogeneity concerns)

• Data  Boards of directors in 2008-2010

Unbalanced panel of 8,279 director-level obs. from 834 firms

• Caveat  We interpret our probit results as correlations
• short depth of our panel and reverse causality issues

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• 3. Determinants: methodology

Women on Boards in Italy – DNB Amsterdam, 19 December 2013

Firms’ characteristics All women Family Non- Family

Size

• Performance
• Age of listing

+ + +

Industry

IT/tlc consumer IT/tlc IT/tlc

Concentrated ownership

+ ++ +

Widely held

+

Institutional investors

+ + +

Board size

+

Independence

+

Interlocking

• Age of directors
• Education

+ +

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• Affiliated women  small caps, consumer sector,

concentrated ownership, larger board

• Unaffiliated women  widely held companies (also),

better-educated, younger, less connected and more independent boards

• penness to diversity?
• Common features (both models)  age of listing (against

‘inertia’), institutional investors and IT/Tlc sector

• Under the fixed effect model, younger and independent

board members drive the appointment of women, especially non-family

• 3. Two different models emerge...

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• 4. Effects of women presence
• Relationship between gender diversity and

two governance outcomes

• 1. Firm-level: number of board meetings

 as a proxy of the effectiveness of board monitoring

• 2. Director-level: individuals’ attendance to board

meetings

 in order to investigate differences in behavior and possible spillover effects on male attendance (Adams and

Ferreira 2009)

• Are there significant relationships and

differences according to affiliation?

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• 4. Effects: results

Board meetings

• Negative correlation with women presence overall, mainly driven

by family women boards

• the result is not significant for unaffiliated women
• But once we include fixed effects, women effect turns out to be

positive

• the first result was determined by time-invariant firms’ characteristics
• No significant result in the sub-groups but the positive sign holds
• nly for non-family women boards

Attendance behavior

• Negative correlation with female presence
• the sign persists for family women
• Negative spillover effects on male-only attendance
• However, once we include firm fixed effects, differences between

men and women loose significance

• some firm-level unobserved characteristic is determinant

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• 4. Effects… to sum up

Puzzling results on the two very basic outcomes

• Negative at a first glance, women presence has a positive

effect on board activity

• Worse at a first glance, women attendance behavior does

not significantly differ from men’s

• Spillover effects are negative
• In both cases:
• Non-family women behave better than affiliated female

directors  i.e. are associated with more positive results of the considered outcomes

• Firm-level unobserved/able variables play a crucial role  to

keep into consideration for future research

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• The objective of this work is to have a preliminary

insight on:

• how women selection has worked so far
• to which companies’ characteristics women presence is

associated

• Until now two different models possibly leading to

different performance

• Future research will address
• characteristics of newly-appointed women in order to

investigate possible differences with ‘incumbents’, first

• a more comprehensive analysis of the effects of gender

diversity in the Italian market that the law will allow to perform, later

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• 5. Conclusions and future work

• 5. Is something changing already?
• Too early to see any real effect
• But the quota regulation is promoting (or forcing) a

huge increase in women representation

• the non-family component of women on Italian boards

is now dominant

• Other recent trends
• Women reached 17% of board seats (June 2013)
• Less executive but more ‘monitoring’ roles (i.e.

independent and minority director)  Active involvement in corporate governance is crucial in the Italian market where conflicts of interest and minority exploitation are central issues

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Women on Boards in Italy

Magda Bianco, Angela Ciavarella, Rossella Signoretti

Workshop on Diversity in Boards – De Nederlandsche Bank Amsterdam, 19 December 2013

Thanks for your attention

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Italy Spain France UK Germany Sweden Norway

Women on boards in Europe (2010)

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Women in the corporate boards of Italian listed companies

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Female representation by Market Index

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Female representation by Industry

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Female representation by Control Model

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Female versus Male directors

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Family vs. Non-family women directors

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