Study: does the gender of directors impact returns?
/An analysis of ASX 300 companies from 2005 shows that there has been a 33 per cent rise in women in non-executive director positions on boards and that so far, this moderate dilution of the manosphere has shown no influence on company returns.
The Ownership Matters study looked into shareholder returns at each company when each director was appointed and saw no influence on returns. But, the researchers also made the observation that the performance of companies with boards comprised of over 90 per cent men performed worse than more gender-diverse boards since 2011.
At 30 June 2020, 33.1 per cent of ASX 300 boards were comprised of women, compared with 2005 numbers - just 9.6 per cent of board roles were filled by women. There are 399 women non-executive directors out of a total of 1362 directors.
There hasn’t been much progress in terms of women’s representation as executive directors like chief executives and chief financial officers - just six per cent, which has sat at about the same level all of those 15 studied years. There are currently more executive directors called Michael or Mark than all women in executive director roles in ASX 300 companies.
The board is more likely to hire a known director that is already a director of another ASX 300 company, with the task left to incumbent directors. Shareholders are unlikely to go against the board, even in the face of continued underperformance. This naturally leaves fresh blood - in this case, women - out of the running before they’re even in the race.
Non-executive directors seeking endorsement or re-election from shareholders received a resounding yes, with 96 per cent on average in favour. There isn’t any meaningful difference in director turnover rates in companies that underperform compared with those who do well.
The researchers said a lack of information on director aptitude might be a reason that shareholders support directors. Individual director skill isn’t really part of how directors are appointed, though some companies do disclose this.
