1.        Introduction

The underrepresentation of women in leadership positions is a fact and a challenge (European Commission, 2012, 2015; Pew Research Center, 2015; ILO, 2015; AAUW, 2016). Věra Jourová (2014), European justice, consumers and gender equality commissioner, notes for instance that “women are still overrepresented in lower paid sectors in the labour market and underrepresented in decision-making positions”. Klaus Schwab, founder and Executive Chairman of the World Economic Forum, rises attention on the changes of the labour market and states that “gender gaps are set to increase in some industries as jobs traditionally held by women become obsolete, while at the same time opportunities are emerging in wholly new domains” (World Economic Forum 2015, p. v).

According to the “Global Gender Gap Report” from 2015, only 59% of the gender gap in “economic participation and opportunity” have been closed by the total 145 countries covered by this report (World Economic Forum 2015, p. v). “Economic participation and opportunity” is a sub-index of the Global Gender Gap Index and it contains three components: the participation gap, the remuneration gap and the advancement gap. When the entire Global Gender Gap Index^[1] is considered in relation to the GDP per capita, Human Development Index, and the Global Competitiveness Index, the authors of the report highlight a strong correlation between gender equality and the economic performance of the countries under scrutiny (World Economic Forum 2015, p. 36). In the same time, though admitting that correlation does not imply causality, the World Economic Forum (2015, p. 36) argues that “empowering women means a more efficient use of a nation’s human capital endowment and that reducing gender inequality enhances productivity and economic growth”. Moreover, the “Global Gender Gap Report” bears a message to the policy-makers who should “give women the same rights, responsibilities and opportunities as men” (World Economic Forum 2015, p. 45).

The European Commission (2015) too considers that “not taking advantage of the skills of highly qualified women constitutes a waste of talent and a loss of economic growth potential” and it encouraged “credible self-regulation” by companies to improve gender balance on corporate boards. As the progress was slow, gender quotas appeared as a necessary instrument to implement change: “The figures show that it is the legislative measures that result in substantial progress, especially if they are accompanied by sanctions” (European Commission, 2012, p. 13)”. Furthermore, the European Commission (2012, p. 7) stresses the economic importance of gender diversity in corporate boards, by quoting several studies which showed that a high percentage of women on board translates into strong financial results. Gender quotas can be regarded just as important as any other targets for managing business performance, as they set objectives with regard to gender composition, which in turn can translates into improved outcomes.

The present article pursues an empirical strategy and focuses on the 50 companies of the EURO STOXX 50 index; it analysis the relationship between their financial performance measured by their EBT and the composition of their management board by asking the question whether companies with a high gender quota achieve a higher profit. A special focus is laid on the two Southern European countries present in the EURO STOXX 50 index, Italy and Spain, as both countries introduced mandatory quotas for their listed companies. Moreover, the paper investigates also the existence of sectoral differences in female representation in management boards and financial performance.

The paper is structured as follows: in a first step, studies which dealt with the same topic are presented creating thus a frame for the present research. In a second step, the research methodology is described. The next section contains the findings. In the concluding section, the findings are discussed, the limitations of the present study are shown and ideas which could be investigated in future research are suggested.

2.        Literature Review

Though there is a vast number of studies dedicated to assessing the impact of women’s presence in management board on the firm performance, the findings are often contradictory. If these findings were to be subjected to a classification, one could identify three categories: Some studies showed that gender diversity of the boards has a negative impact on firm performance (e.g. Cooper, Gimeno-Gascon and Woo, 1994; Carter and Rosa, 1998; Fasci and Valdez, 1998; Adams and Ferreira 2009; Ahern and Dittmar, 2012). Ahern and Dittmar (2012) for example analyse the situation of Norwegian companies after the introduction of gender quotas (according to the legislation, a 40 percent representation of women in the board of all the Norwegian public limited firms was mandatory). The results of this legislative change were rather negative: “The quota led to younger and less experienced boards, increases in leverage and acquisitions, and deterioration of operating performance” (Ahern and Dittmar 2012, p. 137).

Other studies could not identify a significant impact of gender diversity on profitability (Du Rietz and Henrekson, 2000; Marco, 2012). Johnsen and McMahon (2005) for instance emphasize that “consistent statistically significant differences in financial performance and business growth do not exist between female and male owner-managed concerns once appropriate demographic and other relevant controlling influences are taken into account” (p. 115).

Finally, there is a third categories of studies which acknowledge that gender diversity in top management positively affects firm performance (Campbell and Vera, 2010; Dezsö and Ross, 2012, Kahn and Vieito, 2013; Post and Byron, 2015). A complex study was conducted by McKinsey & Company (2007) by selecting 89 European listed companies which distinguished themselves by a high number of women in top management positions. The analysed KPIs were: return on equity (ROI), operating result (EBIT) and the stock price growth. On all these KPIs the companies with a high number of women on board ranked better than the average in their sector (McKinsey & Company, p. 13-14). Barta, Kleiner and Neumann (2012) looked at the relationship between board composition and the returns on equity (ROE) and earnings before interest and taxes (EBIT) of 180 publicly traded companies in France, Germany, United Kingdom and the USA. Their results indicated that companies with diverse boards have significantly higher earnings and returns on equity. Another exhaustive study, in which 2.360 companies from the Morgan Stanley Capital International All Country World Index (MSCI ACWI) were observed over a period of 6 years, was conducted by the Credit Suisse Research Institute (2012) and it reached similar conclusions with those of McKinsey & Company. 

In line with these studies, the present research focuses on the companies of another index, namely the EURO STOXX 50, and aims at exploring whether there is a link between the EBT of these successful European companies and the number of women from their corporate boardrooms. A special focus will be placed on identifying also sectoral differences of women presence in corporate boards. With regard to the two countries here under scrutiny, Italy and Spain, it has to be noted that both countries have statutory quotas: Spain through its Equality Law from 2007 established that larger firms (firms with more than 250 employees) should adopt an Equality Plan which by 2015 should lead to a target of 40 % women on boards (Verge and Lombardo, 2015). Italy introduced a board gender quota in 2011 (Law 120/2011 or the “Golfo-Mosca” law) for publicly listed companies and for state-owned companies (in 2012) and this law stipulates that by 2015 the listed and state-owned companies should have 1/3 women on their boards of directors and statutory auditors (Ferrari et al. 2016).

3.        Methodology

The EURO STOXX 50 Index was selected to represent the performance of the 50 largest companies among 19 super-sectors. It has to be mentioned here that the index composition is subjected to change yearly: stocks can be added and deleted on the basis of an annual review, the number of components remaining the same (50). EURO STOXX 50 is part of the STOXX blue-chip index family. Moreover, EURO STOXX 50 index is one of the most liquid indices for the Eurozone and serves for benchmarking purposes. The index is a controlling index which ensures stable and up-to-date figures. It represents the performance of only the largest and most liquid companies in a sector (STOXX, 2016).

The following study was conducted at the beginning of the year 2016. Due to the fact that most of the 2015 annual reports of the EURO STOXX 50 companies were not published at that point, it was decided to look at the index composition as it was at the end of the year 2014. Therefore, data was collected with regard to the 50 EURO STOXX companies, using on the one hand the information from the annual reports, and on the other hand information from financial websites. In order to examine how successful these companies are, the EBT was chosen as being a relevant KPI, taking thus into consideration the fact that companies may face different tax rates in different states. In other words, the lack of a harmonized taxation system across the Eurozone will not affect the results of this study, the EBT making possible a comparison of the EURO STOXX 50 companies at European level.

[1] The Global Gender Gap Index was created in 2006 by the World Economic Forum and it analyses the gap between man and women with regard to four categories: “Economic Participation and Opportunity”, “Educational Attainment”, “Health and Survival” and “Political Empowerment”.