Women in the boardroom

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Women in the boardroom

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Title: Women in the boardroom
Implications of female quotas in the Norwegian boardrooms
Author: Højmark Nielsen, Louise
Abstract: In 2002 the Norwegian trade minister came with a surprising announcement; He wished to change the Norwegian boardrooms by implementing a gender quota. The first time around the quota was voluntary, but in 2006 it was made mandatory with a transition period of 2 years. This meant that all publicly limited companies would have to have at least 40 % women in their boardroom by January 2008. Looking at the implication from the financial crisis, and the role of the board, it is evident that the boardroom composition plays a big role in the discussion surrounding today’s businesses and how they act in the market. Cases like Lehman Brothers, Enron and Parmalat have played a big part in highlighting the importance of the boardroom and its role in aligning management interests with those of investors. A large part of the discussed has been directed towards the gender composition, and the lack of women in the boardroom. Looking at the proportion of women in the boardroom, and their effect on return to shareholder, this paper finds a negative relationship. This could be explained by different factors such as a lower age and experience amongst female board members, a smaller network, or an increase in boardroom size as more women are taken on. None of these factors turn out to have a significant impact on return to investors, and based on the data there seems to be no increase in boardroom size following the increase of women in the boardroom. Following the negative relationship between the proportion of women and return to shareholders, focus is turned towards the announcement of quotas in Norwegian companies, and its effect on share returns. Using an event study methodology on the relevant companies, mixed results are found, based on different underlying models. To overcome the problem of clustering and autocorrelation, a portfolio should be created. In order to check for model sensitivity two different portfolios are chosen; an equally weighted portfolio and a market capitalization weighted portfolio. The results indicate that the choice between these two yield massively different abnormal returns, going from negative to positive. Using a t-statistic and 3 different models of “normal returns”, no abnormal return can be detected around the event window using a 99% confidence level. Looking at 95% and 90% yield different results, and depends on the combination of models used.
URI: http://hdl.handle.net/10417/5476
Date: 2015-12-10
Pages: 63
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