Gender diversity on boards and audit committees of Spanish listed firms

Abstract

The aim of this thesis is to analyse whether gender diversity on the decision-making bodies of Spanish listed companies may influence the decisions made by these bodies. To achieve this general goal, we propose four specific objectives. The first aim is to analyse whether gender diversity on Audit Committees (hereinafter AC’s) impacts on the financial reporting quality, measured in terms of the type of opinion issued by external auditors in their audit reports. We analyse unqualified and qualified audit opinions. Moreover, the qualifications are divided into two groups: (1) errors, non-compliance and the omission of information and (2) uncertainties. Gender diversity is defined as the presence of women on AC’s; the percentage of women making up AC’s; the number of executive, institutional and independent women on AC’s; and the number of AC’s chaired by women. After controlling for other audit report qualifications-related factors, the results do not show a negative association between gender diversity on AC’s and the probability of receiving qualifications with errors, non-compliance and the omission of information, but we do find a significant and positive relationship between the number of AC’s chaired by women and the likelihood of disclosing qualifications with uncertainties, suggesting that having chairwomen on AC’s would enhance the financial reporting quality. The second aim of this thesis is to analyse whether a gender wage gap exists among boards of directors (hereinafter BD’s) of companies listed on the Madrid Stock Exchange from 2004 to 2011. We hypothesize that the percentage of female directors on BD’s, the presence of female directors on Nomination and Compensation Committees, the presence of well-qualified independent female directors on BD’s, the sector and the geographical region have an effect on the gender wage gap. The results show that the percentage of female directors on BD’s and the geographical region have no effect on the gender wage gap. On the other hand, the findings report that the presence of women on the Nomination and Compensation Committee increases the gender gap in pay and it is reduced when the BD includes independent female directors who have gained a degree and when the company operates in the finance and real estate services sector. In addition, the results demonstrate that the seniority of the female director decreases the gender gap in pay, while there is a rise when the companies are bigger and the size of the BD and the return on assets increase. Thus, these conclusions should encourage regulatory bodies to adopt forceful rules in order to mitigate the gender gap in pay. The third objective is to examine whether gender diversity on BD’s influences the voluntary formation of their board sub-committees. Concretely, we hypothesize that the number of women on BD’s, the percentage of independent, executive and institutional female directors on BD’s, the percentage of shares held by female directors on BD’s and the remuneration of female directors on BD’s have an effect on the voluntary creation of board sub-committees. The results show that the number of women on BD’s only encourages the voluntary creation of an Executive Commission, while the percentage of independent women on BD’s increases the voluntary creation of all or some of their board sub-committees and the Committee for Supervision and Control. The percentage of female executive directors on BD’s reduces the likelihood of creating an Executive Committee. Furthermore, the percentage of institutional female directors on BD’s reduces the formation of all or some of their board sub-committees. Female directors on BD’s, who hold shares, exert a positive influence on the voluntary formation of an Executive Committee. Finally, the findings reveal that the compensation of female directors on BD’s does not contribute to the voluntary creation of all or some of the board sub-committees or to the formation of an Executive Committee and a Committee for Supervision and Control. Finally, the fourth objective of this thesis is to study the impact of gender diversity on BD’s on the dividend policy. We hypothesize that the percentage of female directors, the percentage of independent, institutional and executive female directors and the percentage of shares held by female directors on BD’s have an impact on the dividend payment. Our results show that the percentage of female directors and the percentage of shares held by female directors on BD’s are positively associated with the dividend payout, while the percentage of institutional female directors on BD’s has a negative impact on the dividend payment. The percentage of independent and executive female directors has no effect on the dividend payout. The economic effects of the gender diversity in companies have experienced increased interest in the financial and accounting disciplines in recent years, being largely the contributions relating to the relation between gender diversity and some aspects of the companies (Erhardt et al., 2003; Adams and Ferreira, 2009; Kulich et al., 2010; Van Pelt, 2013). The introduction of gender diversity to AC’s and BD’s has an important role in the decision-making bodies of Spanish firms. Our evidence supports Act 3/2007 of 22 March, about equality of gender on Spanish decision-making bodies, which requires Spanish listed firms to achieve a gender quota of 40% on BD’s from 2007 to 2015, since AC’s chaired by women increase the likelihood of disclosing qualifications with uncertainties, gender diversity on BD’s has an impact on the gender gap in pay, board diversity increases the board sub-committees and women’s presence on BD’s has an impact on the dividend policy. In sum, women have had to overcome external and internal barriers to obtain top positions in firms and exert a great impact on corporate governance. Nevertheless, the results show that there is a limited presence of female directors in high positions in companies; consequently, the progress made is still too slow to meet the government’s 2015 target of achieving a gender quota of 40% on corporate boards. For this reason, it is recommendable that stronger government sanctions combined with more effective equality plans within companies are required for the quota to be met and it is also necessary to continue to conduct research about gender diversity in decision-making bodies, considering that gender diversity affects the functioning and efficiency of AC’s and BD’s.