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Want to improve the company’s performance? Get more women in the boardroom

Do you want to improve company performance?  Get more women in the boardroom

This visualization shows the ownership network of 4,000 Japanese companies in 2013. Credit: Raddant, M., Takahashi, H.

A recent study by the Complexity Science Hub Vienna (CSH) found that companies with female board members generally outperform. The analysis examined the relationship between female board appointments and corporate financial performance, based on data from approximately 4,000 Japanese companies collected between 2004 and 2013.

“This is one of the first large-scale analyzes of female board members in Japan, and it’s one of the largest samples ever analyzed for developed economies,” said CSH researcher Matthias Raddant, the study’s lead author.

Matthias and his colleagues studied the evolution of a group of female board members and their professional networks. “We assessed which companies hire them and what determines the slow but steady increase in female board members over that period,” explains Matthias.

Small increase

Women made up about 2 percent of Japanese boards, with a slight increase over the 10-year period of the survey. “Even in 2022, the share of female board members in Japan will be just 8 percent,” adds Matthias. These figures are well below those in western economies. As of 2022, according to Moody’s Investors Service, 29 percent of board seats in North American and European companies were held by women.

“Our research shows that even if the number of female board members in Japan is still low, they have started to change their position in executive networks. A relatively large number of female board members hold multiple mandates, making them more centralized,” says from Matthias.

Financial results

When it comes to organizational profitability, according to the analysis, companies with at least one female board member outperform those without female board members.

“This result is only significant in the past three years. However, as some previous studies have also found cases where companies with female board members were less profitable than the average, this is still a good result, as our sample size is very large and we can basically exclude negative influences from female board members,” explains Matthias.

Because the effects and mechanisms of more gender diversity on the composition of the board of directors are not yet fully understood, this finding is surprising, says Matthias. But he emphasizes that the discovery may be related to the quality of corporate governance. “Companies with good governance are more profitable and may also be better at facilitating the hiring of female board members.”

‘Birds of a feather stick together’

Furthermore, the research shows that women tend to interact and support each other. It’s the concept of homosexuality, or the idea that ‘birds of a feather stick together’, or that people are more likely to get along if they come from a similar background.

The data showed that companies associated with other companies with female directors are more likely to hire female directors.


The scientists examined information about board composition, including age, gender, and whether they were outside board members or accountants. Financial information was also collected. “We mainly used information about market value, income, total assets, business sector, largest shareholders and shareholder composition,” said Matthias, who is also a researcher at the University for Continuing Education Krems.

The article was published in the magazine empirical economics

Can gender diversity on boards improve corporate social engagement and sustainability?

More information:
Matthias Raddant et al, Corporate boards, inter-organizational links and profitability: the case of Japan, empirical economics (2021). DOI: 10.1007/s00181-021-02062-y

Provided by Complexity Science Hub Vienna

Quote: Do you want to improve the company’s performance? Get More Women in the Boardroom (2022, June 24) retrieved June 24, 2022 from https://phys.org/news/2022-06-company-women-boardroom.html

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