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There is a growing campaign for companies to cater for more women in the top corporate stratum is growing. Proponents of gender equality are encouraging equality between women and men in the workplace, and they consider this from the lowest to the highest level within the organisation. Resultantly, as Bear et al. (2010) indicate, as part of the strategy to enhance maintainable development, there is augmenting encouragement for supporting and hiring females to the CEO level. The number of females in percentage terms occupying sits in the boardrooms of listed companies as CEOs is concerning (McCann and Wheeler, 2011).
In the UK, women involvement in very senior positions is alarming. However, some countries like Germany, France, Italy and Spain have imposed voluntary quotas upon corporations (McCann and Wheeler, 2011). The arguments in favour of female nomination into business case arguments are divided.
There is a wealth of evidence that highlights the lack of diversity of females on the boards of companies that are listed the disparity between male and females increases with the size of the firm, with the current trend being a decrease in women at the top (Kollewe, 2018).
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In research sponsored partly by the Government Equalities Office it was found that despite some progress, only 32 companies in the FTSE 100 had 33% or more of their boards made up of women, the level set by the government as a target to achieve equality (Vinnicombe, Doldor and Sealy, 2018).
In the FTSE 250, the situation is worse only 23.7% of firms had 33% of the board made up of females (Vinnicombe, Doldor and Sealy, 2018). When looking at the position of CEO, in the FTSE 100 only six companies have female CEOs, and only five hold CEO position in the FTSE 250 (Vinnicombe, Doldor and Sealy, 2018 The Telegraph, 2018). With such a significant disparity, one may wonder if this is impacting on the performance of a company. The research proposed seeks to explore this issue, focusing on some of the largest companies the FTSE 100.
Whereas there is an international campaign of gender equality, global companies are still cautious about placing women in the CEO positions except if there is plausible proof that such move will be of great benefit to the organisation. Modern studies have demonstrated that women representation at senior-level of management can impact the ratings of corporate social responsibility ratings, which have a massively affect corporate standing, and which also influences company performance. Elements like share price, financial performance and institutional investment can be significantly affected by the favourable reputation of the corporation. This is because decisions made by board of directors which relate to investment are influenced by social, environmental, and dynamics of corporate governance (Bear et al., 2010).
Prior studies carried out have signposted that involvement of female CEOs are likely to have a substantial impact on company performance (Smith and Villa, 2010). Research carried out like those of Faccio et al. (2015) have revealed that gender equality influences the company’s turnover. For example, Faccio et al. (2015) disclose that there is a general recognition that acquisitions decisions are made by female directors make acquisition decisions that affect shareholder value and this leads to macroeconomic consequences that influence the company’s long-term economic development.
Although theoretical literature is indecisive concerning the influence of more women directors on company performance, Gadhia (2016) cites Governor of the Bank of England, Mark Carney, as claiming that the justification for equality, justice and inclusion is stronger than ever before, and the banking industry should assent diversity in its companies so as to gain the associated advantages. Davies (2011) explains that this assertiveness is replicated in political pressure to proliferate women representation on the board and the consequent development in UK companies. The United Kingdom has delivered deliberate procedures for corporations to augment female representation on their boards but, but there are no legislative quota regimes yet.
According to Mkhize et al. (2011), females are making a contribution to the application of exceptional abilities to corporations that influence companies’ revenues and net profit. After the commencement of the gender equality movement, there is progression in the studies in this area this study aims to add to the continuing studies through researching companies that are socially investing to see if gender has an association with company performances indicators like Tobin's Q and Return on asset.
The main research aim is to assess whether the gender of a CEO can and does make an effect on company performance. The research is guided by the following objectives Decide how CEO gender is associated with performance measures Tobin’s Q and changes in market capitalisation of the company. Quantify the differences that leadership may make to firm results. Assess the degree to which any impact of leadership may be attributed to gender. Assess and quantify the impact CEO gender has on FTSE 100 companies.
Based on the preceding introduction, this study makes an effort to answer the subsequent study problems within the FTSE100 participating companies:
In equivalence with the study questions above, the objectives of this investigation are:
To appraise the association between the gender of the CEOs and the turnover of the company
To evaluate the association between the gender CEOs and company Tobin’s Q and
To scrutinise the association between the gender of the CEOs and changes in the market capitalisation
With increased attention on gender equality, it appears timely that a study is undertaken to asses if CEO gender has any impact on a company result if the study finds differences, the identification of the differences and causes of the divergence may be assessed allowing increased understanding of leadership style on firm performance. The study may facilitate the adoption of more effective leadership strategies by the CEO to improve the performance of their firms.
This dissertation enlarges the restricted literature examining UK companies most current literature scrutinises the USA corporations. Some of the UK based studies are, Gregory-Smith et al. (2014). However, the study findings of this research are equivocal. Additionally, this study has updated the research of the association between gender diversity in the boardroom and company performance and Gregory-Smith et al. (2014) carried out a study that shows that the latest UK study and data examined is from 2011.
Gender Diversity in a Work Place. (2021, Feb 01). Retrieved from https://studymoose.com/gender-diversity-in-a-work-place-essay
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