Female supervisory directors : an empirical study about the correlation between the percentage of female supervisory directors and financial performance for German firms

(1)

Female supervisory directors

An empirical study about the correlation between the percentage of female

supervisory directors and financial performance for German firms.

Name Student: Dimitri Coucoudis. Student Number: 10246967

E-mail: Dimitri.coucoudis@student.uva.nl

Course: Bachelor Thesis Economics & Business Specialization: Finance & Organization

Faculty: Faculty Economics & Business Institute: University of Amsterdam

Study year: 2014/2015

Place and date: Amsterdam, June 29th 2015

(2)

Statement of Originality

This document is written by Student Dimitri Coucoudis who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

(3)

Abstract

In March 2015, German law required major German companies to have 30% female directors in the supervisory board. This study tries to find whether a correlation exists between the percentage of female supervisory directors and firm financial performance. Financial data and the gender of all directors of 78 German companies from the DAX and MDAX is collected for the year 2014 and a linear regression is performed. After controlling for several control and dummy variables a correlation is found between the percentage of female supervisory directors and Tobin’s Q. ROA and ROE do not seem to be correlated with the percentage of female supervisory directors. However, due to small sample size and various causes for potential reverse causation, these results have to be interpreted with extreme caution.

(4)

Table of contents

Although Germany is led by a woman, only 16.6% of all board seats in Germany is held by women in 2014 according to the 2014 Egon Zehnder European Board Diversity Analysis, which sample consisted out of all German companies with a market cap larger than 4 billion. Recent legislation which passed the German lower house of parliament in March 2015 forces German companies to achieve a gender diversity level of 30% starting in 2016. This

legislation requires all publicly listed firms in Germany to fill their supervisory boards with at least 30% female directors eventually.

Prior studies tend to focus more on the ‘’Glass ceiling effect’’ which refers to the implicit barrier women face, when they try to climb on the corporate ladder as Francoeur et al (2008). formulate it. Gang et al (2003). test whether a glass ceiling effect exists for women in Germany and in the United States. They formulate the standard glass ceiling effect as an belief that the playing field for women and men in the labor market is level up to a certain point, after which there is an effective limit on the corporate advancement of women. They find significant evidence for the glass ceiling effect for both Germany and the United States where in Germany the glass ceiling is most evident for the higher income levels. Current legislation in Germany could help breaking through this glass ceiling and there are several theoretical theories in support.

Agency theory could explain why adding female directors to the board is good for firm performance as Dang et al (2011). explain. It could increase the alignment between shareholder and director because a more diverse board is better able to understand stakeholders’ needs. Adding female directors to a male dominated board can bring new perspective to complex cases and helps to correct informational biases. In addition to the agency theory, the stakeholder theory provides some arguments for which female directors could add value to a board. The pressure to appoint more female directors comes from a broad set of people and stakeholders. Ceteris-paribus, firms who actively participate to these pressures from stakeholders are assumed to be relatively successful. Francoeur et al (2008). approach stakeholder theory from the normative perspective of stakeholder theory. From this perspective the appointment of female directors can be seen as a good policy, even if there is no significant relationship with improved financial performance.

This study tries to provide empirical arguments for increasing board room diversity for German firms in the DAX and MDAX over the year 2014. Characteristics about directors

(6)

such as gender, age, tenure and independence are collected. Financial information over the corresponding firms to compute ROA, ROE and Tobin’s Q are collected to measure financial performance. Tests for correlation between the percentage of female directors and firm’s financial performance measurements are performed using regression analysis. After

controlling for several control and dummy variables, who could influence firm performance, the performance measure Tobin’s Q does seem to be correlated with the percentage of female supervisory directors while ROA and ROE does not seem to be correlated with the

percentage of female supervisory directors.

A crucial condition for this study is that supervisory board performance does actually influence firms’ financial performance. And if it does so, does the composition of the

supervisory board in terms of gender affect board performance. It could be that better performing firms are more likely to hire more female directors. This study contributes to existing literature because it provides empirical results in anticipation of very recent

legislation which provides companies with an exogenous shock of corporate governance. The remainder of this study is structured as follows. Part I will summarize the relevant parts of the German Corporate Governance Code and provide a brief summary of the current relevant laws and numbers on female board representation. Part II provides the theoretical framework based on a literature review. Part III describes the data and statistical model and sums up the hypotheses. Part IV presents the empirical results and analysis and part V concludes and discusses limitations and possible extensions of this study.

I.2 German corporate governance code

The Deutscher Corporate Governance Kodex or German Corporate Governance Code presents statutory regulations for the management and supervision of German listed

companies. It contains recommendations and suggestions about internationally and nationally acknowledged standards for good and responsible corporate governance. Relevant sections are highlighted below. Several sections mention the aim for female directors.

The supervisory board forms a nomination committee exclusively of shareholder representatives which proposes suitable candidates to the supervisory board for

recommendation to the general meeting. This is described in section 5.3.3 and therefore shareholders elect the members of the supervisory board. Section 5.4.3 complements this by stating that election to the supervisory board shall be made on an individual basis. An

(7)

the next General Meeting. Proposed candidates for the supervisory board shall be announced there to the shareholders. As pointed out in section 3.3 the supervisory board has to give approval to decisions or measures which fundamentally change the asset, financial or earnings situation of an enterprise. This suggest that the supervisory board has power over significant measures and their performance does matter for financial performance. Section 5.1.2 states that the supervisory board appoints and dismisses the members of the

management board. When appointing the management board, the supervisory board shall respect diversity and, in particular, aim for an appropriate consideration of women.

Section 5.4.1 points out that the supervisory board has to be composed in such a way that its members as a group possess the knowledge, ability and expert experience to properly complete its tasks. It shall specify concrete objectives regarding its composition which, whilst considering the specifics of the firm, take into account the international activities of the enterprise, potential conflicts of interest, the number of independent supervisory board members as specified later in the code, an age limit to be specified for the members of the supervisory board and diversity. These concrete objectives shall, in particular, stipulate an appropriate degree of female representation. Recommendations by the supervisory board to the competent election bodies shall take these objectives into account. The concrete

objectives shall be published in the Corporate Governance Report of the firm.

I.3 Law and Numbers

In modern day world women hold few board seats than men. In 2014 11.6% of all global board seats are held by women, in Europe this is 20.3% as pointed out by numbers of the 2014 European Board Diversity by Egonzehnder. In Germany, 18,6% of all supervisory board seats are held by women as stated in the 2014 Catalyst Census: Women Board

directors. The 2014 Catalyst sample consists out of all 30 companies who compose the DAX. In March 2014 the European Parliament adopted legislation requiring 40% of all

non-executive directors of companies listed on stock-exchanges in EU Member States to be woman by 2020. In March 2015 German Parliament passed similar legislation which starts 1 January 2016 and requires 30% of the non-executive board of all major German listed firms to be woman. This law requires a firm to meet the law as soon as possible. Therefore, firms don’t need to add female directors on the supervisory board before a seat on the board comes available. Norway was the first country who set a compulsory gender quota for the non-executive board in 2005 of 40%. At that time only 9% of the non-non-executive board members

(8)

were woman. Ahern and Dittmar (2011) find that this quota caused a significant drop in the stock price at the announcement date of the law and a decline of Tobin’s Q over the

following years.

This legislation relates to the non-executive or supervisory board or board of directors of German firms. These terms will be used interactively throughout this study. Only 3.9% of all global executive board seats are held by women, whereby European executive boards hold 5.4% women as stated in the 2014 Catalyst Census: Women Board Directors. For Germany this is 5.7%. Although Jalbert et al (2013). find that the number of female CEO’s at large firms have increased to the point that it is possible to compare their characteristics and gender to financial performance, this study focuses on the supervisory board.

II. Theoretical Framework

II.1 Different characteristics between female and male directors.

As the Higgs Study (2003) suggest, female directors may enhance board performance and effectiveness because a woman can bring different perspectives to the group. Higgs tried to stimulate the appointment of women to the supervisory board in 2003 when the percentage of female directors was significantly smaller than in 2014 worldwide. In section 8.4 Higgs states that the supervisory board should consist of a proper balance of skills and experience and no group or individual should dominate. Therefore a certain amount of female directors should be part of a supervisory board.

The question investigated by Adams and Funk (2011) was: are women in the boardroom different from men? After surveying all directors including CEO’s of all 288 publicly traded firms in Sweden in 2005, their answer is yes. Male directors value

achievement and power relatively more than their female counterparts. Universalism and benevolence are valued relatively less by male directors. Female directors tend to care more about stimulation and less about security, conformity and tradition. Gulamhussen and Santa (2010) find a negative relationship between women’s presence in supervisory boards and risk taking measures such as loan loss reserves, loan loss provisions and impaired loans ratio. These relations sometimes also hold for the audit committee and suggest that female directors act less risk averse than male directors. Dohmen et al (2005). find that the willingness to take risks is negatively related to being a woman, using a sample of roughly 22000 people living in Germany. They find that their results are a good predictor of actual risk taking behavior.

(9)

Dang et al (2011). find that female directors can help to avoid highly risky investments as women in general are more risk averse than men and less overconfident. A possible

explanation for this is that women who make it onto the board of publicly traded firms in the sample examined are a selected group with a high taste for stimulation and a low need for security. Therefore female directors could appear less risk averse than male directors.

De Bos et al (2011). try to define independence for internal supervisors using a survey on roughly 2800 Dutch supervisory directors. A cluster analysis shows that two groups of internal supervisors can be distinguished. One group is more inclined to monitor for

stakeholders other than shareholders and has more concerns for independence. This group is significantly younger and more female than the second group who is more male and older and suggest that female directors are more stakeholder orientated. Adams and Ferreira (2008) find that female directors have better attendance records than male directors and are more likely to join monitoring committees which suggest that more gender-diverse boards allocate more effort to monitoring. Hoogendoorn et al (2011). reports about a field experiment conducted to estimate the impact of the percentage of women in business teams on their performance. Teams of students start up a venture as part of their curriculum and team members are selected conditional on their gender. They find that teams with an equal gender mix perform better than male or female-dominated teams. Monitoring is more intense in mixed teams than in homogeneous teams which supports the results partially. This study makes use of data from students in business studies who run a company for one year while studies such as Adams and Ferreira (2009) and Ahern and Dittmar (2011) use data from actual directors.

II.2 Intuitive thoughts for more female directors

Robinson and Dechant (1997) provide a good summary of the concept for gender diversity in the boardroom with limited empirical evidence but intuitive examples. At first gender

diversity promotes a better understanding of the marketplace because attitudes, cognitive functioning and beliefs are not randomly distributed among the population. Second,

boardroom diversity promotes a better understanding of the marketplace which is becoming more diverse by itself. Third, diversity produces more effective problem solving. A variety of perspectives causes directors to evaluate and explore consequences of alternatives more carefully. Finally, diversity could enhance the effectiveness of corporate leadership.

(10)

Heterogeneity at the top of a firm is considered to result in a broader perspective and

therefore a better understanding of the complexities of the market which could lead to better decision making.

Dallas (2002) describes what is known as the upper echelon theory. This theory focuses on the demographics of the firm’s top management. The theory suggests that strategy and performance reflects the cognitive values of firms top management and

social-psychological factors play a very important role in making corporate decisions. A person’s cognitive base will affect his or her recognition of problems and opportunities and therefore his or her decision making. Characteristics such as age, gender, length of tenure in the corporation, education and functional background are important factors that determine the decision making process. The echelon theory also considers the level of diversity or the degree of heterogeneity within the supervisory or executive board. The predictions are based on several studies, from which most are psychological, of groups in experimental settings, like Hoogendoorn et al (2011). did. More gender diverse groups tend to make better decisions involving complex creative and judgmental decisions. More gender diverse groups share conflicting opinions, knowledge and perspectives which result in a so called ‘cognitive conflict’. This lead to a broader consideration of a problem and could therefore improve decision making. When the problems have easily verifiable answers however, more gender diverse groups do not add a lot of value. This is consistent with the findings by Adams and Ferreira (2008) who find that most well governed firms do not benefit from more gender diverse boards.

II.3 Prior empirical evidence

The growing consensus in corporate society is that boardroom diversity is an important goal. Despite increasing attention and legislation for boardroom diversity, empirical evidence comes up with mixed results. Some studies have found positive relationships between board diversity and financial performance while others found opposite effects. An enumeration of studies who found predominately positive results is found below.

A frequently cited study is the Catalyst (2007) study which compared Fortune 500 companies from 2001 to 2004 and divided the companies into four quartiles. They found that companies in the top quartile outperformed companies from the bottom quartile based on ROE. This study did not account for any control variables that might explain certain

(11)

Lückerath-Rovers (2011) examines the financial performance of Dutch companies with and without women on their boards and extends the method used in prior research by Catalyst. She examines 99 Dutch listed companies in the period 2005-2007 and shows that firms with female directors perform better, measured by ROE, than those without female directors. The study focuses on both the supervisory and executive board. Gulamhussen and Santa (2010) found that after controlling for bank and country specific effects, women participation in the supervisory board, in presence and percentage, has a positive effect on ROE, ROA and the operating income. Their sample constituted of 451 large banks from OECD countries. In a sub-sample of 134 listed banks they found that markets have a positive perception of female participation on the supervisory board, measured by Tobin’s Q. Smith et al (2005). examines the relationship between women in top executive jobs and in the board of directors. They use a dataset of the 2500 largest Danish firms over the period 1993-2001. After controlling for various characteristics of the firm and direction of causality they find a positive relationship. Furthermore, their results also show that these positive effects are mainly related to female managers with an university degree. Female directors who don’t hold an university degree have an insignificant or smaller influence on firm performance. Hence whether a female director has a positive effect on firm's performance depends on the characteristics of the specific women. However it could be that women who generally get elected to the board of directors have certain characteristics which generally improve performance. Erhardt et al (2003). examine 127 large U.S. companies over 5 years to find a positive relationship between board gender diversity, ROA and ROI using a regression and correlation analysis. Carter et al (2002). examine the relationship between board diversity, which is defined as the percentage of women and minorities and firm value. After controlling for size and industry they find a significant relationship between the fraction of women or minorities on the board and firm value measured by ROA. They also find that the proportion of women and

minorities on board increases with firm and board size.

Campbell and Mínguez-Vera (2008) use a panel data methodology to examine the correlation between female non-executive directors and firm value measured by a proxy for Tobin’s Q using an event study for Spanish firms. They found that the presence of women itself on the board of directors does not affect firm value. The diversity of the board however has a positive impact on firm financial performance. This implies that the focus should be the balance between male and female directors. Strydom and Yong (2012) examined gender

(12)

diversity and its effect on firm performance and earning quality and in particular whether a minimal percentage of female directors is required for optimal board achievement. They distinguish between ‘’tokenism’’, which could be having one women on the board, and real diversity which means having enough female directors to empower them. They show that firms with at least three female directors outperformed other companies significantly in terms of firm performance and earnings quality in the Australian environment. These results are aligned with the results of Joecks et al (2013). who find that there have to be a critical mass of 30% of female directors to have an influence on firm performance and with the results of Campbell and Mínguez-Vera (2008). They stress that there has to be a certain mix between female and male directors in the supervisory board to have an influence on financial

performance. The German legislation aspires to the same critical mass found by Joecks et al (2013). and Elstad and Ladegard (2010).

Several studies found a negative or no relationship between boardroom diversity and firm performance. Marinova et al (2010). examines whether board diversity has a positive effect on firm performance for Dutch and Danish companies. They use empirical data on 102 Dutch and 84 Danish firms and perform a regression based on a two-stage least-squares estimation and Tobin’s Q as a measure of performance. They find no effect on boardroom gender diversity and financial performance. Hussein and Kiwia (2009) examine the relationship between board gender diversity and firm performance for a panel data set of 250 US firms over the period 2000-2006. The results find no significant relationship between board gender diversity and ROA or Tobin’s Q. However the Shannon index, which measured the

percentage of women in the board room does show a significant positive relationship between board gender diversity and firm value. Therefore different measures give different results and other criteria such as board size could affect firm performance. Their results also show that well performing firms tend to appoint more women to their supervisory board.

Adams and Ferreira (2008) found a positive significant relationship between the fraction of female directors and Tobin’s Q for 1065 public companies. However they found a negative relationship between board gender diversity and ROA. They find that female

directors have better attendance records and are more likely to join monitoring committees and therefore allocate more effort to monitoring. Their results show that mandating quotas for well governed firms can reduce firm value and the average effect of gender diversity on firm

(13)

performance is negative. Opposite from these results, the study of S&P 500 companies by Carter et al (2002). found no effect for Tobin’s Q and a positive effect for ROA. After Norway law required 40% of Norwegian firms supervisory directors to be women in 2005, Ahern and Dittmar (2011) measure the change in performance after this exogenous shock. They find that the quota led to a significant decline in Tobin’s Q. Also firms with at least one female director compared to firms with no female director showed a different stock price reaction. The limited pool of new female directors led to female directors with less

experience as a director and a lower average age than their male directors. This could be a self-solving problem because newly appointed female directors build up director experience over the years and therefore some years after its adaption, the quota could lead to an qualified and experienced pool of female directors. ,

Gupta et al. (2014) find that a more gender and ethnically diverse board could enhance firm’s performance on social, environmental and governance issues but increasing board diversity does not result in higher financial performance of the firm. Boards with higher gender diversity will be more sensitive to stakeholders, not solely to shareholders. Thereby enhancing a firm’s non-financial performance which can be good for society or the firm long term performance. They use the 1153 largest firms listed in the US during 2003-2012.

II.4 Assumes boards matter for financial performance

Gulamhussen and Santa (2010) find that researchers across the accounting, economics and management disciplines agree that boards are critical to strategic and financial decision making in firms. In addition to the classical role of monitoring in accounting, boards also have a key influence on firms’ strategic orientation and risk management. In the economical field boards play an important role as inside monitors and through their advisory role as outsiders (Adams & Ferreira, 2008). In management, boards monitor but also bring in

knowledge in terms of their advice and industry connections. Cornelli et al (2012). investigate for a large sample of privately-owned firms who

experienced large exogenous shock to their corporate governance rules. They identify a set of country-specific law changes that give boards the legal power to fire a CEO without approval of shareholders at large. This allows them to investigate how board of directors monitor management, when they fire a CEO, and whether these actions improve firm performance.

(14)

They find that past financial performance is much less important in firing a CEO than soft information and show that increases in board power leads to higher CEO turnover which improves firms performance. Therefore the results suggest that monitoring can be valuable and provides justification for the need for boards. Cornelli et al (2012). further mention that soft information is non-verifiable and therefore non-contractible so a firm needs a board that can collect this information and who has the power to act on it. Xu (2013) compares

characteristics of independent directors and supervisory directors in Chinese listed firms. His results show that the characteristics of supervisory directors have no clear relationship with firm performance. Independent of their age or backgrounds, supervisory directors do not have the real authority to affect the decision making process of management and therefore do not significantly contribute to firm performance. Section 5.1.2 of the German Corporate

Governance however states that the supervisory board appoints and dismisses the members of the Executive Board and thereby has the power to fire or hire (un)successful executive

directors which suggest that the supervisory board does affect financial performance indirectly.

Bermig and Frick (2010) study the effect of board size and board composition on the operating performance and market value using a dataset of all DAX, MDAX and SDAX over the period 1998-2007 which leads to 2382 observations. Contrary to most studies they are not able to find significant effects on board composition or board size on firm valuation and performance, while controlling for a large number of variables which can change firm performance. Tthey do find a slight positive effect of board size on Tobin’s Q, however the impact on total shareholder value is negative and overrules the positive effect on Tobin’s Q.

III. Data Description and Model. III.1 Data

This study uses data about major companies in Germany. Data about 30 companies from the German Stock Index (DAX) are collected and data about 50 companies from the MDAX are collected. The companies in the DAX and MDAX are both traded on the Frankfurt Stock Exchange. The DAX constitutes of the 30 largest and most actively traded German

companies. The stocks are measured by trading volume and market capitalization on the basis of the number of shares in free float, as well as their respective sector. The MDAX consists

(15)

of the 50 largest companies that rank below the DAX shares in terms of trading volume and market capitalization.

From each company data about the gender of the supervisory and executive directors were collected together with their corresponding board sizes. The number of female directors is then divided by the corresponding board size to find the percentage of female directors. The performance measure Tobin’s Q is calculated by dividing Market Capitalization by Total Assets. ROE is calculated by dividing the total parent stockholders equity by net income. In addition to Tobin’s Q and ROE, the ROA of the corresponding firms is collected as a performance measure. Sales growth is measured by the following formula:

Sales Growth= (Sales 2014 - Sales 2013)/(Sales 2013).

Furthermore directors specific information such as age and tenure are collected. From each company the average age and average tenure of the supervisory and executive directors are calculated by dividing the total age of the board by the corresponding board size. The fraction of independent supervisory directors is found by dividing the amount of independent supervisory directors by the supervisory board size. Financial data is collected over the year 2014. Information about directors gender, age and tenure are collected from 2014.

Information about the industry of the firm is collected for the dummy variables

manufacturing and financial services. Directors gender was collected halfway through April 2015, thereby assuming the board composition did not change significantly.

III.2 Sample selection

Financial data is collected via the components of the Wharton Research Data Services or WRDS. The Compustat database, which is part of WRDS, is used for most financial data. If certain financial data was missing from the Compustat output then annual reports were used to fill up this missing data. Information about directors age and tenure within the company were found using Bureau van Dijk. Part of Bureau van Dijk is Amadeus where information about directors was found. Information about the gender of the directors was found using the specific firms’ website. Most companies have pictures of their executive board on their website and sometimes also from their supervisory board. If there are no pictures available and the gender of the directors is not perfectly clear from their names then further study is performed via the website of the firm. Information about the sector of the firm is mostly collected via google finance.

(16)

This leads to a dataset of 80 companies and information about their supervisory and executive directors. Most of these companies are an AG or SE. AG stands for

Aktiengesellschaft and is subjected to German law and specifies the two-tier board. SE stands for Societas Europaea which means the company is subjected to European law as well as German law. However in the MDAX are two companies who are neither AG or SE. These companies are Airbus Group N.V. and RTL Group S.A. NV stands for Naamloze

Vennootschap or ‘’Nameless Partnership’’ and is a legal entity in Holland. S.A. stands for Societe Anonyme and is a legal entity of Luxembourg. Although both entities are comparable to the AG, they are omitted from the sample. It could be that these companies are not

subjected to the new German legislation about Gender diversity and therefore the sample

consists of 78 companies.

For this study data about both executive and supervisory directors was collected. The new legislation however concerns only the supervisory board and most studies done about female directors apply to the supervisory board; from which female directors form a more significant part than the executive board. Therefore the regression of this study will have the percentage of female supervisory directors as independent variable.

III.3 Empirical model

This study tries to understand if gender diversity in the supervisory board is correlated with firm financial performance. The empirical model is as follows:

FINPERFORM = α0 + α1GENDERDIV + α2BOARDSIZE + α3FIRMSIZE + α4SALCHANGE + α5TENURE + α6DIRAGE + α7FINANCIAL +

α8MANUFACTURING + α9TOKENISM + 𝑒. Where:

FINPERFORM = The financial performance of a company measured by ROA, ROE and Tobin’s Q.

GENDERDIV = The percentage of female directors in the supervisory board. BOARDSIZE = The number of supervisory directors.

(17)

SALCHANGE = The percentage of change in net sales over 2013 to 2014. TENURE = Average tenure within the firm of the supervisory directors. DIRAGE = Average age of the supervisory directors within the

firm. . FINANCIAL = Dummy variable who denotes financial services firms with a 1 and others 0.

MANUFACTURING = Dummy variable who denotes manufacturing firms with a 1 and others 0.

TOKENISM = Dummy variable who denotes firms with at least 3 female supervisory directors with a 1 and others 0.

III.4 Hypotheses development

This study tries to understand if gender diversity in the supervisory board is correlated with firm financial performance measured by ROA, ROE, Tobin’s Q. The research question is stated as follows:

Does gender diversity in the supervisory board show signs of correlation with firm’s financial performance?

Prior research has shown us that women and men have different characteristics and can therefore show different behavior when acting as a director. As Adams and Funk (2011) and Gulamhussen and Santa (2010) conclude, female directors can appear to act less risk averse which is contradicted by the findings about the general women by Dang et al (2011). Hoogendoorn et al (2011). find that more heterogeneous groups appear to perform better. Intuitively one could argue that more diverse boards are better able to understand broader stakeholders needs because of the different perspectives a diverse board can bring, like Robinson and Dechant (1997) argue in their study. These studies suggest that a more diverse board could have a positive effect on firm performance. However, the studies that examined the role between supervisory board diversity and firm financial performance come up with mixed results and some of them are not able to find significant results.

Gender diversity in the supervisory board can only have an effect on firm

(18)

supposed to add value by monitoring and controlling. Female directors are considered to be better in monitoring than male directors, but like Adams and Ferreira (2008) found, does not always add value for firms. Although most studies agree that boards matter for financial performance, there are studies such as Xu (2013) who finds that the supervisory board does not really matter for firm performance. In summary, the distinguishing characteristics of female directors can theoretically lead to improved performance. There is mixed evidence in this field but the positive effects, especially up to a certain threshold of female directors seem to dominate. Assuming that board performance does matter for firm’s financial performance, the following hypotheses will be tested:

H

0 =Gender diversity in the supervisory board is not correlated with firm performance

H

1 = Gender diversity in the supervisory board is correlated with firm performance

The German legislation about gender quota aspires to the same critical mass found by Joecks et al (2013). and Elstad and Ladegard (2010). Hereby 30% of the supervisory board has to be women to make a real difference for firm performance. Therefore a second hypothesis will be tested for which tokenism might show correlations with financial performance.

IV. Empirical Results and Analysis

This study tries to find whether a correlation might exist between the percentage of female supervisory directors and firm’s financial performance. In table 1 the percentage of

supervisory directors is stated as ‘’Gender Diversity Supervisory Board’’ and coefficients with the performance measures ROA, ROE and Tobin’s Q, are first reported without control and dummy variables. None of the coefficients of the performance measures are significant.

To further investigate whether a correlation between the percentage of female directors and the various performance measures might exist, various control and dummy variables who might influence performance are added to the regression. After adding these control and dummy variables for the performance measure ROA, the coefficient of ROA is not significant at any of the significance levels. The control variables Supervisory board size and Sales change are significant at the 0.10 level. The control variable Average tenure

(19)

supervisory director is significant at the 0.05 level and the dummy variable Financial, which denotes a 1 to financial services firms and 0 otherwise, is significant at the 0.01 level.

The coefficient of ROE is not significant at any of the significance levels, neither are the control and dummy variables. The coefficient of Tobin’s Q is significant at the 0.05 level. The coefficient of the control variable Supervisory board size is also significant at the 0.05 significance level. The coefficient of the dummy variable Financial, is significant at the 0.01 significance level. The dummy variable Tokenism, which denotes a 1 to firms with less than 3 female supervisory directors and 0 otherwise, is not significant for any of the performance measures at any of the significance levels.

Table 1

Regression of independent variables on three performance measures, with and without control and dummy variables.

The sample consist out of data from 1118 supervisory directors and 78 firms over the period 2014. Linear regression was performed to find whether an correlation might exist between the performance measures ROA, ROE and Tobin’s Q. and the independent variable Gender diversity in the supervisory board. The regression is performed with and without control and dummy variables. The dummy variable financial and manufacturing is equal to one if the firm is operating in the financial services or manufacturing market. Robust standard errors are in brackets. Asterisks indicate significance at 0.01 (***), 0.05 (**) and 0.10 (*) levels and ^ indicates that coefficients are multiplied by ten thousand. To improve the readability of the table, some coefficients show 1 or 2 decimal places.

Dependent variables: performance measures Independent variable ROA ROE Tobin's

Q Gender Diversity Supervisory Board 4.169 -0.735 2.284 [4.889] [12.622] [1.501]

With Control and dummy variables

Gender Diversity Supervisory Board 7.192 -8.212 3.291** [5.608] [25.088] [1.557]

Supervisory Board Size -0.248* -0.14 -0.10**

[.131] [.335] [.041]

FirmSize -0.022^ -0.418^ .008^

[0.144^] [.639^] [0.348^]

Sales Change (2013-2014) 0.113* 0.174 0.015

[0.059] [.191] [.013]

Average Tenure Supervisory Directors -0.21** -0.508 -0.016

[.099] [.352] [.021]

Average Age Supervisory Directors 0.05 0.201 -0.001

(20)

Dummy Variable Financial -3.6*** -3.361 -1.2***

[.899] [4.043] [.276]

Dummy Variable Manufacturing 1.545 0.051 0.341

[1.056] [3.050] [.275]

Dummy Variable Tokenism 1.282 4.17 0.501

[1.482] [5.361] [.383]

Tries study used information about directors in Germany for the year 2014. Gender data about executive and non-executive or supervisory directors were collected as shown in table II. The results of this study are compared to the results of two studies who measured the percentage of female directors; 2014 Catalyst Census: women Board Directors and 2014 Egon Zehnder Board Diversity. Table III gives some summary statistics and Table IV shows all firms in the sample and information about the gender of their directors. Table V shows firms who are short of the quota of 30% and table VI shows firms who have a ‘token’ amount of female supervisory directors.

Table II

Summary statistics on female directors in Germany.

This table provides summary statistics about female executive and supervisory directors in Germany for the year 2014. Row (1) represents the 2014 Catalyst Census: Women Board Directors. Row (2) represents the 2014 Egon Zehnder Board Diversity Analysis. Row (3) represents the results found by this study; female supervisory directors. Row (4) shows the average of the three studies combined. All number are to be interpreted as percentages. The first column (Exec.) shows the percentage of female executives, the second column (Super.) shows the percentage of female supervisory directors and the third column (All seats) shows the total percentage of female directors. The fourth column (Short of 30%) shows by what percentage firms are short of meeting the quota of 30%, according to the three studies, and is calculated by subtracting the percentage of 30 by the percentage in the second column. The fifth column (Percentage firms with women on the board) shows the percentage of firms with at least one women on the executive or supervisory board. The Catalyst Census sample consists out of all German companies in the DAX and the Egon Zehnder sample consists out of all German firms with an market capitalization larger than 4. The sample of this study consists out of 78 firms from the DAX and MDAX. A specification of the firms short of the quota is found in table V.

As found by other studies Exec. Super. All seats

Short of 30%

Percentage firms with women on the board (1). 5.3 18.6 18.6 11.4 100

(2). 5.7 19.1 16.6 10.9 93.2

As found by this study

(21)

V. Conclusions

In this study an empirical regression is performed to measure the correlation between gender diversity in the supervisory board and firm financial performance for German firms in the DAX and MDAX. After controlling for several control and dummy variables and correcting for robust standard errors, a sign of correlation between gender diversity and the performance measure Tobin’s Q is found. The performance measure ROA and ROE do not seem to be correlated with gender diversity in the supervisory board. Tokenism does not seem to be correlated with financial performance. These conclusions provide empirical arguments for very recent legislation and are consistent with prior studies who often find mixed results for different performance measurements.

However, due to some limitations of this study, these conclusions ought to be

interpreted with extreme caution. The sample size consist out of 78 firms from the DAX and MDAX over the year 2014, which gives a relatively low statistical power compared to prior similar studies. The gender of the supervisory directors is determined in the course of 2015 and therefore the percentage of female directors does not have to be exactly the same in 2014. Also the results are not adjusted for the tenure of female directors while one could assume that it takes a period of t years before a new appointed female director does influence financial performance. There could be various omitted control variables who potentially influence financial performance and should be added to the regression such as the year of the IPO or some ownership characteristics.

Using several theoretical and intuitive arguments such as the agency and stakeholder theory one can argue in favor of the appointment of female directors. Even if there is no significant relationship with financial performance, this could lead to improved non-financial performance. However the appointment of female directors as tokens does not seem to add value so there need to be a certain level of female directors on a board to have an effect on financial performance; thereby assuming that boards do matter for financial performance.

D. Coucoudis. (3).

(22)

V.1 Discussion

Due to the limitations of the regression and study there are some potential extensions who could improve some of these limitations and help with future studies. Instead of a regression with over an one-year period, one could check for the market adjusted financial performance over a longer time period and thereby increasing the statistical power which helps to conclude something about causal relationships instead of correlations. An event study can be done rather than a regression, because the market price reaction prior and after the announcement date of the gender quota law can be compared as an exogenous shock, like Ahern and Dittmar (2011) did. ROE does seem to be very testable for this study as none of the variables were significant.

Adams et al (2011). state that the benefits and costs of boardroom diversity quotas are ultimately borne by shareholders and therefore it is important to examine how they react to increases in gender diversity. The regression performed in this study could be replaced by an event study were one could compare for differences in market reactions between the

appointment of female or male directors. Ahern and Dittmar (2011) measure the change in Tobin’s Q and market price reaction after Norway passed a gender quota law in 2003. In their study Tobin’s Q declined significantly and firms with at least one female director showed a significant smaller market price reaction than firms with no female directors. Therefore this alternative event study can be extended by measuring the different adjusted market price reactions between firms who are close to the quota on the announcement date of the Gender quota law, and firms who need to significantly replace more male directors for female directors to meet the quota. Intuitively and aligned with the findings of Ahern and Dittmar (2011), firms who are close to meeting the quota on the announcement date of the law should have less extreme market price reactions than firms who are less close meeting the quota. An overview of firms who are short of the quota is found in table V.

When doing an regression over a time period of multiple years, one could omit female directors who don’t have a minimal tenure of t years within the firm. Therefore the

assumption that it takes some years for a new appointed female director to actually influence performance is taken in to account and by comparing this alternative regression with the regression in this study, this assumption can be checked. Since the token female director does not seem to add to board performance, one could omit firms who do not fulfill a certain level

(23)

or threshold of female directors. An overview of firms who have less than three female supervisory directors is found in table V1.

There are several causes which could lead to reverse causation. Better performing or larger firms could be better capable of appointing female directors, and could face more pressure from stakeholders to meet certain gender diversity levels. Since female directors tend to be more stakeholder orientated, firms with an relatively high percentage of female directors could be more sensitive for the gender quota demands of these stakeholders. Firms who have an high percentage of female directors tend to have fewer problems attracting other female directors, which can accelerate the hiring of female directors before potential benefits are proven, as found by

(24)

VI Reference list

2014 Catalyst Census: Women board directors. (2015, 13 January). Available at:

http://www.catalyst.org/knowledge/2014-catalyst-census-women-board-directors 2014 Egon Zehnder European board diversity analysis. (2014). Available at:

http://egonzehnder.com/EBDA-2014-map

Adams, R. & Ferreira, D. (2009).Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309. doi:

10.2193/ssrn.1107721

Adams, R. & Funk, P. (2011). Beyond the glass ceiling: Does gender matter? UPF Working

Paper Series, 58(2), 219-235. doi: 10.2139/ssrn.1475152

Ahern, K. & Dittmar, A. (2011). The changing of the boards: The impact on firm valuation of mandated female board representation. Quarterly Journal of Economics,

127(1), 137-197. doi: 10.2139/ssrn.1364470

Bermig, A. & Frick, B. (2010). Board size, board composition, and firm performance: Empirical evidence from Germany. Working paper, University of Paderborn,1-43. Available at: http://ssrn.com/absract=1623103

Bermig, A. & Frick, B. (2010). Who is the better monitor? The impact of female board directors, board composition and boars size on earnings management. Discussion

Paper, Goethe-Universität Frankfurt, 10-18. Availabe at: geaba.de/DP/DP-10-18.pdf

Campbell, K. & Mínguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial performance, Journal of Business Ethics, 83(3), 435-451. doi:

10.1007/s10551-007- 9630-y

Carter, D., Simkins, B. & Simpson, G. (2002).Corporate governance, board

diversity, and firm performance. Financial Review, 38(1), 33-53. doi: 10.1111/1540-6288.00034

Dallas, L. (2002). The new managerialism and diversity on corporate boards of directors.

Tulane Law Review, 76, 1363-1405. doi: 10.2139/ssrn.313425

De Bos, A., Lückerath-Rovers, M. & Van Zijl, N. (2011). Views on the indefinable independence – Results from a survey among supervisory directors in the Netherlands. Available at: http://ssrn.com/abstract=1748525

Deutscher Corporate Governance Kodex. (2014, 30 September). Available at: http://www.dcgk.de/en/home.html

(25)

Elstad, B. & Ladegard, G. (2010). Women on corporate boards: Key influence or Tokens?

Journal of Management and Governance, 16(4), 595-615. Available at:

http://ssrn.com/abstract=1582368

Erhardt, N., Werbel, J. & Shrader, C. (2003). Board of director diversity and firm financial performance. Corporate governance: An international review. 11, 102-111. Available at: http://ssrn.com/abstract=416337

Formulas and Tables Statistics (September 2014). Department of Economics and

Econometrics, Faculty of Economics and Business, University of Amsterdam.

Francoeur, C., Labelle, R. & Sinclair-Desgagne, B. (2008). Gender diversity in corporate governance and top management. Journal of Business Ethics. 81, 83-95. Available at: http:ss.com/abstract=1159472

Gulamhussen, M. & Santos, S. (2010). Women in bank boardrooms and their influence on performance and risk-taking. Working Paper, Harvard University. Available at: http://ssrn.com/abstract-1615663

Gupta, P., Lam, K., Sami, H. & Zhou, H. (2014) Board diversity and its effect on firm financial and non-financial performance. doi: 10.2139/ssrn.2531212

Higgs, D. (2003, January). Review of the role and effectiveness of non-executive directors. Available at: http://www.ecgo.org/codes/documents/higgsreport.pdf

Hoogendoorn, S., Oosterbeek, H. & van Praag, M. (2011). The impact of gender diversity on the performance of business teams: Evidence from a field experiment. Management

Science, 59, 1514-1528. doi: 10.2139/ssrn.1826024

Hussein, K. & Kiwia, B. (2009) Examining the relationship between female board members and firm performance - A panel study of US firms. African Journal of Finance and

Management. Available at: http://ssrn.com/abstract=1596498

Jalbert, M., Jalbert, T. & Furumo, K. (2013). The relationship between CEO gender, financial performance and financial management. Journal of Business and Economics

Research, 11(1), 25-33. Available at: http://ssrn.com/abstract=2218859

Joecks, J., Pull, K. & Vetter, K. (2013). Gender diversity in the boardroom and firm

performance: What exactly constitutes a “critical mass?”. Journal of Business Ethics, 118(1), 61-72. doi: 10.2139/ssrn.2009234

Marinova, J., Plantenga, J. & Remery, C. (2010). Gender diversity and firm performance: Evidence from Dutch and Danish boardrooms. Discussion Paper, Tjalling C.

(26)

Koopmans Research Institute, 10-03. Available at: http://www.talentnaardetop.nl/

uploaded_files/document/2010_Gender_Diversity_Evidence_Dutch_and_Danish_Boa .pdf

Lückerath-Rovers, M. (2013). Women on board and firm performance, Journal of

Management & Governance, 17(2), 491-509. doi: 10.2139/ssrn.1586832

Rhode, D. & Packel, A. (2014). Diversity on corporate boards: How much difference does difference make? Delaware Journal of Corporate Law, 39(2), 377-426. doi: 10.2139/ssrn.1685615

Robinson G., & Dechant K. 1997. Building a business case for diversity. Academy of

Management Executive, 11(3), 21-31. doi: 10.5465/AME.1997.9709231661

Strydom, M. & Au Yong, H. (2012). The Token Woman. 25th Australian Finance

and Banking Conference 2012. Available at: http://ssrn.com/abstract=2136737

Xu, H. (2013). How much do the characteristics of independent directors and supervisory board members affect firm performance in China? Discussion Papers, University of

(27)

VII Appendix. Table III

Summary statistics.

The sample consists out of 1118 observations for supervisory directors from 78 firms for the year 2014. Data was collected through Wharton Research Data Services. Most

financial information was collected through Amadeus, which is part of Bureau van Dijk and Execucomp, which is part of Compustat. Information on directors was collected through Amadeus. ROA is net income divided by book assets. ROE is net income divided by shareholder equity. Tobin’s Q is the market value of the firm’s assets divided by its book value. Gender diversity supervisory board is the percentage of female directors in the

supervisory board. Firm size is measured by market capitalization. Sales change is the change in net sales over the year 2013-2014. Average tenure supervisory directors is the average tenure of the supervisory directors within the firm. Average age supervisory is the average age of the supervisory directors. The variable financial is an dummy variable equal to1 if the firm is operating in the financial sector and 0 otherwise. The variable manufacturing is an dummy variable equal to1 if the firm is operating in the manufacturing sector and 0

otherwise. The variable tokenism is an dummy variable equal to 1 if there are at least three female supervisory directors on the board and 0 otherwise.

Number of Standard

Variable observations Mean deviation Min Max

ROA 78 4.446 4.272 -6.7 21.15

ROE 78 13.414 12.907 14.71 85.31

Tobin's

Q 78 1.077 1.103 0.023 6.312

Gender Diversity Supervisory

Board 78 0.186 0.101 0 0.438

Supervisory Board Size 78 14.333 4.855 3 24 Firm

Size 78 19223.51 27497.21 859 108090

Sales Change

(2013-2014) 78 2.269 9.774 30.59 48.64

Average Tenure Supervisory

Directors 78 11.564 5.533 3 26

Average Age supervisory

Directors 78 63.09 7.815 39 74 Dummy Variable Financial 78 0.103 0.305 0 1 Dummy Variable Manufacturing 78 0.321 0.47 0 1 Dummy Variable Tokenism 78 0.551 0.501 0 1

(28)

Table IV

List of firms in sample and the gender of their directors.

This table provides an overview of all 78 firms in the sample of this study and the gender of their 1118 supervisory and 388 executive directors. The first column shows the name of the firm and its legal form. The second column shows the ticker symbol of the firm. Column (1) shows the number of executive board seats and column (2) shows the number of female executive directors. Column (3) shows the number of supervisory board seats and column (4) shows the number of female executive directors. Column (5) and (6) show the percentage of executive and supervisory female directors respectively, and is calculated by dividing column (2) by column (1) and column (4) by column (3).

Firm Ticker (1) (2) (3) (4) (5) (6)

A.Springer SE SPR 4 0 9 1 0 0.11

Aareaal Bank AG ARL 4 1 12 1 0.25 0.08

Aurubis AG NDA 3 0 12 3 0 0.25

Bertrandt AG BDT 4 1 12 2 0.25 0.17

Bilfinger SE GBF 6 0 20 4 0 0.2

Brenntag AG BNR 5 1 16 3 0.2 0.19

Celesio AG CLS1 3 0 12 4 0 0.33

CTS Eventim KGAA EVD 4 0 20 4 0 0.2

Deutsche Euroshop AG DEQ 4 1 20 3 0.25 0.15

Deutsche Wohnen AG DWNI 3 0 20 5 0 0.25

DMG Mori Seiki AG GIL 6 0 14 2 0 0.14

DT.Annington Imm. SE ANN 3 0 18 4 0 0.22

Duerr AG DUE 4 1 12 2 0.25 0.17

Elringklinger AG ZIL2 4 0 20 4 0 0.2

Evonik Industries AG EVK 3 0 12 0 0 0

Fielmann AG FIE 4 1 9 3 0.25 0.33

Fraport AG FRA 4 0 16 7 0 0.44

Fuchs Petrol SE FPE3 5 0 12 3 0 0.25

Gea Group AG G1A 3 0 14 3 0 0.21

Gerresheimer AG GXI 4 1 12 1 0.25 0.08

Gerry Weber Int. GWI1 3 0 6 1 0 0.17

Hann.Rueck SE HNR1 7 0 9 3 0 0.33

Hochtief AG HOT 4 0 18 3 0 0.17

Hugo Boss AG. BOSS 3 0 12 1 0 0.08

Jungheinrich AG JUN3 4 0 12 2 0 0.17

Kabel DT. Holding AG KD8 5 0 12 5 0 0.42

Kion Group AG KGX 3 0 16 2 0 0.13

Kloeckner & CO SE KCO 4 0 6 0 0 0

Krones AG KRN 6 0 12 2 0 0.17

Kuka AG KU2 2 0 11 1 0 0.09

Leg Immobilien AG LEG 4 0 5 0 0 0

(29)

Man SE MAN 6 0 15 2 0 0.13

Metro AG MEO 4 0 20 4 0 0.2

MTU Aero Engines AG MTX 3 0 12 2 0 0.17

Norma Group SE NOEJ 3 0 6 1 0 0.17

Osram Licht AG OSR 2 0 12 2 0 0.17

Prosiebensat.1 AG PSM 4 0 8 2 0 0.25

Rheinmettal AG RHM 3 0 20 2 0 0.1

Rhoen-Klinikum AG RHK 3 0 20 4 0 0.2

Salzgitter AG SZG 3 0 20 3 0 0.15

Stada Arzneimitt AG SAZ 3 0 9 0 0 0

Suedzucker AG SZU 4 0 20 6 0 0.3

Symrise AG SY1 3 0 12 3 0 0.25

Tag Imm. AG TEG 3 1 4 0 0.33 0

Talanx AG TLX 6 0 16 4 0 0.25

Wacker Chemie AG WCH 4 0 16 2 0 0.13

Wincor Nixdorf AG WIN 4 0 12 2 0 0.17

Adidas AG ADS 5 0 12 4 0 0.33 Allianz SE ALV 11 1 12 4 0.09 0.33 Basf SE BAS 9 1 20 4 0.11 0.2 Bayer AG BAYN 5 0 20 3 0 0.15 BMW AG BMW 8 1 20 5 0.13 0.25 Beiersdorf AG BEI 6 0 12 3 0 0.25 Commerzbank AG CBK 7 0 20 5 0 0.25 Continental AG CON 8 1 20 4 0.13 0.2 Daimler AG DAI 8 1 20 3 0.13 0.15 Deutsche Bank AG DBK 8 0 24 7 0 0.29 Deutsche Broerse AG DB1 6 1 18 3 0.17 0.17 Lufthansa AG LHA 5 2 20 5 0.4 0.25 Deutsche Post AG DPW 6 1 10 2 0.17 0.2

Deutsche Telekom AG DTE 7 1 10 1 0.14 0.1

E.ON SE EOAN 6 0 12 1 0 0.08

Fresenius Medical Care AG FME 8 0 6 0 0 0

Fresenius SE & Co FRE 7 0 12 0 0 0

Heidelberg Cement AG HEI 6 0 12 2 0 0.17

Henkel AG & Co HEN 6 1 16 7 0.17 0.44 Infineon Technologies AG IFX 3 0 16 4 0 0.25

K&S AG SDF 5 0 3 0 0 0 Lanxess AG LXS 3 0 12 2 0 0.17 Linde AG LIN 6 0 12 2 0 0.17 Merck KGaA MRK 6 1 16 4 0.17 0.25 M.Rueckversicherungs-Ges AG MUV2 9 1 20 7 0.11 _0.35 RWE AG RWE 9 0 20 4 0 0.2 Sap AG SAP 5 0 18 4 0 0.22 Siemens AG SIE 10 1 20 3 0.1 0.15

(30)

Table V

Firms who are short of meeting the quota of 30%.

The first column shows the name of the firm and the second column shows the ticker symbol of the firm. Column (1) shows the number of supervisory board seats and column (2) shows the number of female supervisory directors. Column (3) shows the percentage of female directors and is calculated by dividing column (2) by column (1). Column (4) shows the percentage by which the firm is short of meeting the quota of 30%. Column (5) gives the absolute number of directors who need to be added to the board to meet the quota. All numbers in this column should be rounded off upwards unless a number ends with 0.

Firm Ticker (1) (2) (3) (4) (5)

A.Springer SE SPR 9 1 0.11 0.19 1.7

Aareaal Bank AG ARL 12 1 0.08 0.22 2.6

Aurubis AG NDA 12 3 0.25 0.05 0.6

Bertrandt AG BDT 12 2 0.17 0.13 1.6

Bilfinger SE GBF 20 4 0.2 0.1 2.0

Brenntag AG BNR 16 3 0.19 0.11 1.8

CTS Eventim KGAA EVD 20 4 0.2 0.1 2.0 Deutsche Euros. AG DEQ 20 3 0.15 0.15 3.0 Deutsche Wohnen AG DWNI 20 5 0.25 0.05 1.0 DMG Mori Seiki AG GIL 14 2 0.14 0.16 2.2 DT.Ann. Imm. SE ANN 18 4 0.22 0.08 1.4

Duerr AG DUE 12 2 0.17 0.13 1.6

Elringklinger AG ZIL2 20 4 0.2 0.1 2.0 Evonik Industries AG EVK 12 0 0 0.3 3.6 Fuchs Petrol SE FPE3 12 3 0.25 0.05 0.6

Gea Group AG G1A 14 3 0.21 0.09 1.3

Gerresheimer AG GXI 12 1 0.08 0.22 2.6 Gerry Weber Int. GWI1 6 1 0.17 0.13 0.8

Hochtief AG HOT 18 3 0.17 0.13 2.3

Hugo Boss AG. BOSS 12 1 0.08 0.22 2.6 Jungheinrich AG Jun-03 12 2 0.17 0.13 1.6

Kion Group AG KGX 16 2 0.13 0.17 2.7

Kloeckner & CO SE KCO 6 0 0 0.3 1.8

Krones AG KRN 12 2 0.17 0.13 1.6

Kuka AG KU2 11 1 0.09 0.21 2.3

Leg Immobilien AG LEG 5 0 0 0.3 1.5

Leoni AG LEO 12 2 0.17 0.13 1.6

Man SE MAN 15 2 0.13 0.17 2.6

Metro AG MEO 20 4 0.2 0.1 2.0

ThyssenKrupp AG TKA 4 0 20 6 0 0.3

(31)

MTU Aero Engines AG MTX 12 2 0.17 0.13 1.6 Norma Group SE NOEJ 6 1 0.17 0.13 0.8 Osram Licht AG OSR 12 2 0.17 0.13 1.6 Prosiebensat.1 AG PSM 8 2 0.25 0.05 0.4

Rheinmettal AG RHM 20 2 0.1 0.2 4.0

Rhoen-Klinikum AG RHK 20 4 0.2 0.1 2.0

Salzgitter AG SZG 20 3 0.15 0.15 3.0

Stada Arzneimitt AG SAZ 9 0 0 0.3 2.7

Symrise AG SY1 12 3 0.25 0.05 0.6

Tag Imm. AG TEG 4 0 0 0.3 1.2

Talanx AG TLX 16 4 0.25 0.05 0.8

Wacker Chemie AG WCH 16 2 0.13 0.17 2.7 Wincor Nixdorf AG WIN 12 2 0.17 0.13 1.6

Basf SE BAS 20 4 0.2 0.1 2.0 Bayer AG BAYN 20 3 0.15 0.15 3.0 BMW AG BMW 20 5 0.25 0.05 1.0 Beiersdorf AG BEI 12 3 0.25 0.05 0.6 Commerzbank AG CBK 20 5 0.25 0.05 1.0 Continental AG CON 20 4 0.2 0.1 2.0 Daimler AG DAI 20 3 0.15 0.15 3.0 Deutsche Bank AG DBK 24 7 0.29 0.01 0.2 Deutsche Broerse AG DB1 18 3 0.17 0.13 2.3 Lufthansa AG LHA 20 5 0.25 0.05 1.0 Deutsche Post AG DPW 10 2 0.2 0.1 1.0 Deutsche Telekom AG DTE 10 1 0.1 0.2 2.0

E.ON SE EOAN 12 1 0.08 0.22 2.6

Fresenius M. Care AG FME 6 0 0 0.3 1.8 Fresenius SE & Co FRE 12 0 0 0.3 3.6 Heidelberg Cement AG HEI 12 2 0.17 0.13 1.6 Inf. Technologies AG IFX 16 4 0.25 0.05 0.8

K&S AG SDF 3 0 0 0.3 0.9 Lanxess AG LXS 12 2 0.17 0.13 1.6 Linde AG LIN 12 2 0.17 0.13 1.6 Merck KGaA MRK 16 4 0.25 0.05 0.8 RWE AG RWE 20 4 0.2 0.1 2.0 Sap AG SAP 18 4 0.22 0.08 1.4 Siemens AG Volkswagen AG SIE VOW 20 20 3 3 0.15 0.15 0.15 _0.15 3.0 3.0

(32)

Table VI

Firms with less than 3 female supervisory directors.

This table shows all firms who have less than 3 female supervisory directors and therefore female directors could be ‘tokens’. The first column shows the name of the firm and the second column shows the ticker symbol of the firm. Column (1) shows the supervisory board size and column (2) shows the amount of female supervisory directors. Column (3) shows the percentage of female supervisory directors and is calculated by dividing column (2) by column (1). Column (4) shows the absolute amount of female directors who should replace male directors to have at least 3 female supervisory directors on the board. Column (5) gives the relative amount of female directors who should replace male directors to have at least 3 female supervisory directors on the board, and is calculated by dividing column (4) by column (1). Firm Ticker 1 2 3 4 5 A.Springer SE SPR 9 1 0.11 2 0.22 Aareaal Bank AG Bertrandt AG ARL 12 1 0.08 2 0.17 BDT 12 2 0.17 1 0.08

DMG Mori Seiki AG GIL 14 2 0.14 1 0.07

Duerr AG DUE 12 2 0.17 1 0.08

Evonik Industries AG EVK 12 0 0 3 0.25

Gerresheimer AG GXI 12 1 0.08 2 0.17

Gerry Weber Int. GWI1 6 1 0.17 2 0.33

Hugo Boss AG. BOSS 12 1 0.08 2 0.17

Jungheinrich AG JUN 12 2 0.17 1 0.08

Kion Group AG KGX 16 2 0.13 1 0.06

Kloeckner & CO SE KCO 6 0 0 3 0.50

Krones AG KRN 12 2 0.17 1 0.08

Kuka AG KU2 11 1 0.09 2 0.18

Leg Immobilien AG LEG 5 0 0 3 0.60

Leoni AG LEO 12 2 0.17 1 0.08

Man SE MAN 15 2 0.13 1 0.07

MTU Aero Eng. AG MTX 12 2 0.17 1 0.08

Norma Group SE NOEJ 6 1 0.17 2 0.33

Osram Licht AG OSR 12 2 0.17 1 0.08

Prosiebensat.1 AG PSM 8 2 0.25 1 0.13

Rheinmettal AG RHM 20 2 0.1 1 0.05

Stada Arzneimitt AG SAZ 9 0 0 3 0.33

Tag Immobilien AG TEG 4 0 0 3 0.75

Wacker Chemie AG WCH 16 2 0.13 1 0.06

Wincor Nixdorf AG WIN 12 2 0.17 1 0.08

Tag Immobilien AG TEG 4 0 0 3 0.75

Deutsche Post AG DPW 10 2 0.2 1 0.10

Deutsche Telekom AG DTE 10 1 0.1 2 0.20

E.ON SE EOAN 12 1 0.08 2 0.17

(33)

Fresenius SE & Co FRE 12 0 0 3 0.25 Heidelberg Cement AG HEI 12 2 0.17 1 0.08

K&S AG SDF 3 0 0 3 1.00

Lanxess AG LXS 12 2 0.17 1 0.08

Female supervisory directors : an empirical study about the correlation between the percentage of female supervisory directors and financial performance for German firms