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The influence of Gender Diversity in Boards on CSR
and Corporate Reputation.
Master Thesis
By:
Martijn Mullink
S1774301
Supervisors: Veen, K van.
Yannopoulou, N
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Abstract
This study focuses on the concepts of Gender Diversity, Corporate Social Responsibility (CSR) and Corporate Reputation. The study tried to find positive relationships between gender diversity and CSR and between CSR and corporate reputation. By analyzing these relationships this study tried to find whether women influence reputation by influencing CSR. The sample consists of 121 companies drawn from the Fortune 500 by sales. The results showed a relationship between gender diversity and CSR, but not between CSR and
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Introduction
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The concept of corporate (or, organizational) reputation has received ample attention from the research community over the past decades (Brammer e.a.; 2009). Corporate reputation refers to “the public’s cumulative judgment of corporations over time” (Fombrun & Shanley, 1990, p235)
A good corporate reputation is important for corporations for a number of reasons. Previous research has found that a good reputation can positively influence financial performance, institutional investment, and share price (Brammer, S et al. 2009). A positive reputation also improves a firm’s ability to attract new employees/job applicants and positively influences employee retention (Gatewood, R, Gowan, M, and Lautenschlager, G. 1993). Employees working within a company that they believe to have a good reputation with external groups are less likely to leave, and enjoy a higher level of job satisfaction (Riordan, C., Gatewood, R. & Bill, J. 1997). A positive reputation also enhances the strength of corporate branding. This enables a company to use their brand equity to launch new products and enter new markets with a higher success rate (Dowling, G. 2006).
Researchers have identified a number of factors that influence corporate reputation. Fombrun and Shanley identified factors that enhanced corporate reputation such as accounting
measures of profitability and risk, market value, firm size and demonstration of social concern (Fombrun et al. 1990). More recent research identified more ‘socially constructed’ factors that enhance corporate reputation, such as Customer Satisfaction (Bontis, N., Booker, L. and Serenko, A. 2007), Stakeholder Familiarity (McCorkindale, T. 2008) and corporate citizenship programs are related to an enhanced corporate reputation (Gardberg, N & Fombrun, C. 2006)
Contemporary corporations have to deal with increased public scrutiny, society puts pressure on boards and corporate governance. Previous research has shown that board composition and gender composition within the board influences reputation. For example, Brammer,
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and the board of the company. These results lead to believe that board composition influences corporate reputation.
Corporate Social Responsibility is also associated with a better corporate reputation. (Garldberg & Fombrun, 2006) Corporate Social Responsibility (CSR) is a term that has gained increasing importance in the last decade. Being socially responsible for many companies is becoming more important, Companies are introducing triple bottom line reporting and increasingly introduce CSR programs. In the first decade of this century, corporations started to use the word Corporate Citizenship in an attempt to reposition the corporation in society as a citizen, with accompanying rights and obligations towards their environment. Corporate Citizenship has been identified by Garldberg & Fombrun (2006) as an influence to corporate reputation. They found that activities that attempt to promote corporate citizenship can lead to increased reputation with customers, suppliers and local employees. Branco and Rodriques (2006) have argued that CSR can bolster reputation with various stakeholders. This leads to the recognition of CSR as a potential factor to influencing corporate reputation.
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Finally, Stephen Bear, Noushi Raman & Corinne Post (2010) based their paper on the previous papers and investigated the link between gender diversity in boards and corporate reputation and added CSR as a mechanism through which women influence corporate reputation. They wondered what the influence of women on the board is on corporate reputation and how women create this influence. In their research, they examine whether women influence reputation directly or indirectly (through policy changes). Secondly, their research focuses on the relationship between female representation in a corporate board and CSR scores. The final element of the research investigated the influence of CSR on corporate reputation. They found evidence for the indirect link and concluded that women influence social policy within a company and in return that influenced reputation in a positive way.
This paper will continue down the road initially explored by Bear et al (2010), by looking at the relationships between gender diversity, CSR and corporate reputation. Bear et al (2010) took a sample of 51 corporations in the health industry, which consisted of health care insurance and managed care (10), health care medical facilities (10), health care pharmacy and other services (8), pharmaceuticals (13), medical and other precision equipment (11), and wholesalers’ health care (7). The study performed by Bear et al (2010) has statistically
significant results. The study of Bear and his collegues has some limitations. One limitation of this approach lies in the fact that endogeneity problems were not taken into account: CSR can also influence gender diversity, because a socially responsible company is likely to have equality in the workforce. Furthermore, they did not assess multiple reputation ratings; the MAC reputation rating used by Bear and colleagues is based on the opinions of
businesspeople only (more on this topic will follow in problem statement).
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This paper will explore how the presence of women on a corporate board affects a firm’s corporate social responsibility ratings, and, how these CSR ratings in turn influence corporate reputation. The sample was drawn from the 150 biggest companies in the USA by sales after excluding cases that had missing data 121 companies remained. By only taking companies from the USA we do not have to control for country of origin effects. This sample is constructed in this fashion, because these companies belong to multiple industries and they have publicly available data on boards and CSR reporting. Therefore it can add to Bear et al (2010) by taking a sample that can look at different industries, to see if the relations shown by Bear et al (2010) are transferable across industries. As an addition to the existing literature about boards we will investigate if there is a link between the gender of CEO’s and CFO’s and CSR, because Manner (2010) found that a female CEO has a positive influence on Corporate Social Performance. Some of the reasons of why gender diversity within boards influences CSR are applicable on CEO’s and CFO’s.
The paper is organized as follows: firstly, a problem statement is constructed, outlining the ‘why’ of this research. The second part will discuss the literature written about gender diversity and CSR in relation to corporate reputation; hence, it explains the ‘what’ of this research. The fourth part is the methodology and analysis (the ‘how’ of this research). The final part will be a discussion of results, followed by a concluding section describing ramifications and suggestions for further research
Problem Statement
It has been suggested for some time that board diversity may have significant returns in terms of improved board, and in return corporate, effectiveness (Berghe, L van den & Levrau, A. 2004; Vinnicombe, S and Singh, V 2003; Walt van der, N and Ingley, C. 2003). However, other researchers see board gender composition acting as a signalling strategy from the company. It is a form of information (e.g., the value firms place on hiring, retaining, and advancing women in the corporation) which in turn directly influences external evaluators (e.g., investors) and as a result this would influence firm outcomes (e.g. financial
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that women might also influence corporate reputation through perhaps other ways, for example by influencing policy.
Following Bernadi, Bosco and Vasill (2006) in looking at gender diversity and firm presence in the ‘100 best companies’ list, Bear et al (2010) assume that women influence social policy. Consequently it is argued that through this female influence on policies, corporate reputation is enhanced. Bernardi et al (2006) investigated whether women are more represented in boards of companies that belong to the “Fortunes 100 best companies to work for” list in comparison to companies in the Fortune 500. Because a company that treats employees well is likely to promote gender equality, it can be expected that those companies employ more women across all levels of the organization. The rating of a company to be part of the list consists for two-thirds out of the results of the Institute's Trust Index survey, which is sent to a random sample of employees from each company. The survey for the Trust Index makes inquiries that are related to the employees attitudes about the management's credibility, job satisfaction, and camaraderie. The other third of the scoring is based on the company's responses to the Institute's Culture Audit, which includes detailed questions about pay and benefit programs and a series of open-ended questions about hiring, communication, and diversity.” (Moskowitz, M, Levering, R & Tkaczyk, C. 2010). Bernardi et al (2006) used this list as a proxy for Corporate Social Responsibility and found that presence of women on a corporate board is positively related to that corporation’s position on the ‘100 best companies’ list.
However, taking the list of the Fortune’s 100 best companies to be proxy of CSR, as Bernardi et al (2006) did, is perhaps not appropriate. In its broadest definition, CSR also includes environmental and social practices. A good measurement of CSR is thus not only concerned with the internal view of a company, whereas the ‘100 best companies’ list is solely based on internal employee policy.
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Bear et al (2010) were looking for a link that CSR creates between Gender diversity and corporate reputation. Bear et al state; “With the increased public scrutiny around boards and
corporate governance, one expects board composition to affect corporate reputation,
especially when it comes to characteristics such as board gender composition” (Bear, S. 2010
p207). Bear et al (2010) also discussed that CSR programs have a positive influence on corporate reputation. Although as Bear et al state the relationship between Gender diversity and corporate reputation has been proven(Bernardi et al, 2006; Bilimoria, 2000; Brammer et al, 2009), the mechanisms through which this influence happens have yet to be identified. A mechanism is the activity that an entity engages in to influence a certain outcome. For example if a person wants to indirectly influence an outcome, he tries to influence a variable that has the direct effect on the dependent variable. An example would be that a person that sells ice cream influences the weather and in return he can sell more ice cream to his customers. Thus by trying to actively influence the mechanism (influencing the weather) a certain outcome is the result. Bear et al (2010) argue CSR is the mechanism through which board gender diversity influences corporate reputation.
Based on the results of Bear et al (2010), who found relationships between gender diversity, CSR and corporate reputation and the results of Bernardi et al (2006) and Brammer et al (2000) who found respectively a role between gender diversity and CSR and a role between gender diversity and reputation. And finally, the results from Gardberg and Fombrun (2006) where a role between CSR and reputation is identified, the following research question is proposed.
To what extent does gender diversity within boards make use of influencing CSR as a mechanism to influence corporate reputation?
Bear et al (2010) took an international approach to their research by including companies from more than just the United States. However Ruigrok, Peck and Tacheva point out (2007) that the national origin of the corporation and thus the national culture can have influence on the composition of the board due to different governance systems. Therefore, although Bear et al (2010) found results it might be questionable to assume their results being correct.
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more proactive in managing corporate responsibility initiatives to enhance stakeholder
relations”(Bear et al, 2010, p212). This might create problems with consistency when we look at results from Bernardi et al (2006) in which they say that only gender diversity within industries that deal with the end consumer influences CSR.
Furthermore, research suggests that women do have a different approach on management issues and often have a different background. According to Jhunjhunwala and Mishra (2012) “Women are believed to be more intuitive in decision making, have the ability to multitask and are better at relation building. Men tend to be more task-focused and their decisions are based on information and procedures”. Therefore the assumption of adding women to the board would only act as a signal to external parties seems limited and as Jhunjhunwala and Mishra point out there is the suggestion that women can influence policy due to different approaches. In short, the value that women bring to the board is differing perspectives that may enhance director understanding of the external environment. This supports effective decision making and may enhance ratings for CSR. (Bear et al. 2010)
This paper will add to the body of literature by building on what Bear et al (2010) and other researchers started. Many scholars have been looking for reasons why the addition of women on corporate boards might lead to improved firm performance. Leading theories include signalling theory and women being seen as tokens on the board. Researchers have
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Secondly this paper will look at one country so that country effects are irrelevant and furthermore it will look at different industries to see if the results of Bear et al (2010) are transferable. Lastly, Bear et al (2010) did not take in consideration the consequences of selecting their reputational ranking due to lack of information. Mahon & Wartick (2012) point out however, that the ranking used by Bear et al (fortune most admired companies list) is focused on the business people’s view on companies and does not take in consideration the customers view on these corporations. A good reputation in the eyes of customers is important for the sales of the corporation as a company with bad reputation will suffer in sales.
Furthermore, Mahon & Wartick (2012) found that the customer view on these companies does not move linear with the stakeholders view used in the Fortune’s MAC list. This means that although the MAC reputation rating for a company can be high this is not necessarily the rating that a customer would give this company. The use of both these rankings will hopefully create more valid results. Finally, Bear et al (2010) their research is limited due to the small sample and the single industry that has been used and thus needs to be elaborated upon to create consistent results.
The question is relevant in a business context because it can indicate where the best opportunities for female managers are. When a significant relationship between good CSR and females in the board is found it would mean that women have better opportunities to get into a board that strives to have a better reputation. We can also argue that companies that strive to have better CSR should hire women as directors. Furthermore the findings of this research can have implications for investors and boards. If women in the board improve CSR and in turn corporate reputation then the knowledge that a good reputation is associated with better financial performance can lead to investors demanding more women on corporate boards (Fombrun, 2006).
Subquestions
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mean that this sample should show that gender diversity influences corporate reputation positively as has been shown by previous research and that CSR influences corporate reputation as would be expected when we take into account the results of Bear et al (2010).
Based on the research from Bear et al (2010) and Post et al (2011) we suppose that there is a link between Gender diversity in boards and CSR. Therefore, the following sub question is proposed.
Does Gender Diversity (the amount of women in the boards) influence corporate reputation?
Galdberg and Fombrun (2006) use corporate citizenship in their paper in which corporate citizenship encompasses corporate investments of time and money in pro bono work,
philanthropy, support for community education and health, and protection of the environment. These factors are often described as components of the company’s “social performance” (Wood, D. 1991). Galdberg en Fombrun found that corporate citizenship activities have a positive influence on corporate reputation. More recently, Minor and Morgan (2011) have shown that CSR activities can partially insure against reputational risk. Based on the results of previous research we assume that corporations with better CSR policies have a better
reputation. However, if CSR does not create the influence on corporate reputation this would mean that women do not influence reputation through CSR. Therefore the following sub question is relevant:
Does a corporation’s CSR rating influence corporate reputation positively?
Finally the third sub question has to do with the influence of women in boards on CSR. It has been said that women approach problems from a different perspective. As Hillman, Cannella and Harris (2002) state, women are more likely to be support specialists and community influencers. As such, it is likely that increasing gender diversity in corporate boards will have a positive effect on corporations’ CSR ratings.
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Conceptual Model
From the main research question we can derive the following conceptual model. First as identified in the literature by Bear et al(2010) there is a relationship between the amount of women in the board of directors and the rating on corporate social responsibility. The relationship here is that the more women are in the board the higher the CSR strength rating (Bear et al, 2010). The relationship is that the amount of women (gender diversity) influences corporate reputation which was proven by Bernardi et al, 2006; Bilimoria, 2000; Brammer et al, 2009. The final part of the model is the role of CSR as a mechanism between gender diversity and corporate reputation. CSR itself thus influences reputation. Bear et al (2010) suggest that CSR might be a mechanism through which gender diversity also influences corporate reputation.
Literature
Corporate reputation is often cited to be seen as the extent to which a corporation is being seen as good, admired, respected, and/or held in high esteem by the public. The more positive a corporation is rated on these attributes, the more the corporation the corporation is trusted (Dowling, G & Moran, P. 2012). Trust helps the organization, because people have more confidence in the organization’s integrity, abilities, and plans for the future. Consequently, a good reputation works by increasing the trustworthiness of the seller and the trust of the buyer, thereby reducing risk and the associated transaction costs. Hence, reputation is
valuable to the organization as a source of competitive advantage and to its stakeholders as a guarantee of probity and longevity (Dowling et al, 2012).
Corporate Social Responsibility
Rating
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Reputation, at its core, is a result of past actions that show stakeholders information about how well a company conforms to their expectations and meets its commitments (Brown and Logsdon, 1999). When a company has a well-developed reputation it becomes one of a firm’s most strategic resources (Flanagan and O’Shaughnessy, 2005). One major determinant of a positive reputation comes through positive customer word-of-mouth (Hennig-Thurau et al., 2002). Positive word-of-mouth is a result of customers who are satisfied with their
interactions with a firm. Further, Nguyen and Leblanc (2001) argue that a positive reputation is one of the most reliable indicators of whether or not a firm’s customers are satisfied, because satisfied customers rate a company’s reputation higher. CSR activities can influence the experience of customers to create better customer satisfaction. (Galbreath, J & Shum, P. 2012) Therefore reputation can be influenced by CSR. (Galbreath et al. 2012)
Barnett (2007) defines CSR as ‘‘a discretionary allocation of corporate resources toward
improving social welfare that serves as a means of enhancing relationships with key
stakeholders” (p2007). A stakeholder view is visible is this definition. The basis of why CSR
can influence reputation is explained by using the article of Mahon and Wartick (2012). In this article they discuss CSP (Corporate Social Performance) which is an alternative of CSR. They state that” CSP rests with the motivating principles of corporate social responsibility that lead to the adopted processes and activities of corporate social responsiveness that result in the impacts of corporate social outcomes. Stakeholders then evaluate the impacts.” (Mahon & Wartick, 2012 p15) These outcomes can then be evaluated differently by these
stakeholders and thus the outcomes of these CSR activities can have positive or negative influences on the other firm outcomes such as financial performance and reputation (Mahon & Wartick, 2012).
Furthermore, definitions of CSR show that firms need to demonstrate societal benefits that include, but go beyond, economic outcomes (Galbreath et al. 2012). The definition of Barnett (2007) refers to enhancing social welfare which goes beyond economic outcomes. One way in which the benefits of socially responsible actions are perceived by society as valuable is through a positive reputation (Brammer and Pavelin, 2004). Signalling theory (Spence, 2002) argues that CSR has a positive impact on reputation. According to signalling theory, when a corporation is demonstrating socially responsible behaviour, this emits a signal to
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influenced (Fombrun and Shanley, 1990). A corporation’s reputation is a representation of public opinion. Influencing such opinions by corporations is dependent upon meeting the expectations of stakeholders, and thus the ability of a corporation to demonstrate a high level of convincing CSR signals to the stakeholders, that the corporation will behave in accordance with their expectations (Brammer and Pavelin, 2006). In turn, positive stakeholder
perceptions by meeting stakeholder expectations through for example demonstration of CSR lead to a better corporate reputation. This ability to build a positive reputation ensures the continued participation of stakeholders (Brammer and Pavelin, 2006), which is critical to firm survival and performance (Clarkson, 1995).
However, the public may perceive CSR practices differently, depending on prior corporate reputation (Bae and Cameron 2006). Corporations with prior positive reputations are more likely to enjoy favourable judgments of their CSR activities. In contrast, firms with a negative prior reputation are more likely to have their CSR activities judged as being self-interested activities. Therefore prior reputations might influence the effect of CSR activities (Lii, Y-H & Lee, M. 2011).
Branco and Rodrigues (2006) have argued that corporations that are active in CSR can help improve their reputation with a broad range of stakeholders (e.g. customers, suppliers and investors). Fombrun and Shanley (1990) have found that corporations with a foundation and who give more to charity have a better reputation than corporations that did not. Giving to charity and having a foundation are signals that show responsiveness and built reputation in the eyes of stakeholders. Pfau et al (2008) state that an important aspect to increase corporate reputation is to have a good communicative strategy about CSR issues.
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An example of how CSR can improve reputation or hedge against reputational damage is Nike. Nike employed a passive CSR strategy before they had a crisis in labour standards. When they were publicly attacked for using sweatshop labour, Nike continued to react passively. As a consequence Nike even went to court and received extensive reputational damage. Afterwards it turned out that the only thing Nike had to do was to adhere with the labour standards they had written. After this event Nike changed their policy to a proactive stand on CSR and present day is one of the more reputable companies in the world and are even called advancers in human rights, standard setters in human resource policy and
eventually customers financially rewarded Nike for its repositioning in CSR by creating more sales which increased profits. (Waller, R & Conaway, R. 2011) It is an example in which CSR activities or at least responding to the environment created an opportunity to improve a
company’s reputation.
CSR also includes ethical behaviour under which the promotion of gender equality can be listed. Furthermore female directors may influence the perceptions of external parties about the effectiveness of a boards functioning either due to an expectation that having female directors will improve board processes or because female directors have important skills, knowledge and competencies that they can bring to the boardroom. More specifically, having female directors may help the organization in managing the relationship with key stakeholder groups (Burke, 1997; Carver, 2002; Daily, Certo and Dalton, 1999; Singh and Vinnicombe, 2004).Therefore you might expect that women in the board can be of an influence on CSR in that they influence processes and can help in managing relations with stakeholders which in turn can increase perceived social performance.
Corporate reputation refers to ‘‘publics’ cumulative judgment of firms over time’’ (Fombrun and Shanley. 1990 p235). In short, by being active in CSR, corporations show that they are meeting their stakeholders expectation, furthermore research showed that corporations that give money to charity or have a foundation have a better reputation. Finally, Fombrun and Shanley (1990) have shown that the greater the contribution to social welfare the higher the reputation of the company. From this follows the first hypothesis.
17 Gender Diversity
Board Diversity has been defined in various ways. Van der Walt and Ingley(2003) argue that, “the concept of diversity relates to board composition and the varied combination of
attributes, characteristics and expertise contributed by individual board members” (p219).
Within this definition there is a distinction between demographic (observable) and cognitive (unobservable) attributes of diversity (Milliken and Martins, 1996). Gender diversity is one aspect of board diversity’s demographic aspect and describes the composition of the board in terms of gender. Earlier studies have raised awareness of the relative homogeneity in boards, highlighted the differences across countries and are mapping its evolving pattern (e.g.
Bernardi et al, 2006).
There are two organizational theories that provide basis for explaining gender diversity on boards. The first theory is resource dependence theory. Resource dependency theory offers the grounds for the board’s function of providing critical resources to the corporation, which include legitimacy, advice, and counsel (Hillman and Dalziel, 2003). These resources in the board provide the corporation with support in understanding of, and responding to its environment (Boyd, 1990) which in return can help the corporation to better manage their CSR issues, women often bring different resources to the table than men.
The second theory, agency theory provides the grounds for the board’s function of monitoring the executive team on behalf of the shareholders (Eisenhardt, 1989; Fama and Jensen, 1983). In order to exercise this monitoring role, the board needs the right mix of experience and capabilities to be able to evaluate management and assess the business strategies and their impact on CSR issues (Hillman and Dalziel, 2003).
Research suggests that firms with a higher percentage of female board members do in fact have a higher level of charitable giving (Wang and Coffee, 1992; Williams, 2003), more favourable work environments (Bernardi et al., 2006; Johnson and Greening, 1999), and higher levels of Environmental CSR (Post et al., 2011).
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Evidence shows that having more female directors may stimulate more participative
communication among board members if one assumes that gender differences in leaderships styles also exist at board levels (Bear et al, 2010). If female directors are more participative (Eagly, A., Johannesen-Schmidt, M and van Engen, M. 2003), democratic (Eagly and
Johnson, 1990), and communal than men (Rudman, L A and Glick, P. 2001), then this would mean that having more women on a board instigates more open communication among members of the board. The needs of stakeholders may be better assessed if a broader perspective is achieved. As a result the board’s ability to effectively assess CSR might be enhanced.
Pfeffer and Salancik (1978) argue that boards are used to link the corporation to external organizations in order to address environmental dependencies (stakeholder approach). Pfeffer and Salancik (1978) talk about four primary benefits that these external linkages can create: 1, provision of resources which include, information and expertise; 2 creation of channels of communication with constituents of importance to the firm; 3 provision of commitments of support from important organizations or groups in the external environment; and 4, creation of legitimacy for the firm in the external environment (Pfeffer and Salancik. 1978).
Therefore, board diversity may contribute positively to a firm’s reputation due to the perception that female directors bring distinctive and valuable resources.
Furthermore, research suggests that increased diversity may lead to more workforce motivation and loyalty(Powell, 1999). Female directors are often seen as providers of
mentoring services for ambitious, junior colleagues. These directors give motivation to these women to reach their career goals (Burgess, Z and Tharenou, P. 2002; Catalyst, 1995). Selby (2000) states that; ‘directors with diverse skills, experiences and backgrounds are more likely
to raise questions that add to, rather than simply echo, the voice of management’ which can
constitute that women have different approaches to for example CSR.
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In short gender diversity can play a significant role in improving a board's, cultural, social and human capital, which makes diversity play an important role in creating the ability of a board to perform (Brammer et al, 2009).
Gul, Srinidhi and Ng (2011) suggest that, board gender diversity could improve the quality of discussions and increase the capability of the board to provide better oversight of firm’s disclosures and reports. There is also the possibility that gender diversity reduces board effectiveness by increasing disunity among the board and as a consequence constraining its ability to act. In the current literature, some support is found for the first possibility.
Researchers have found that gender diverse boards are associated with higher quality board deliberations and discussion of tough issues that all-male boards often regard as off limit (Stephenson, 2004; Clarke, 2005; Huse and Solberg, 2006; McInerney-Lacombe et al., 2008). Researchers have also found that it creates more effective board communication (Joy, L. 2008), which helps creating a greater diffusion of information from the board to the investors. Furthermore, Hillman, Shropshire, Albert and Canella (2007) and Adams and Ferreira(2009) suggests that female directors provide greater oversight on managers and also greater
monitoring of managers about their actions and reports (Hillman et al., 2007; Adams and Ferreira, 2009). Having more women on the board enhances the board’s expertise by increasing the range of professional experience and heightening the number of board members with advanced degrees (Hillman et al. 2002). Women then increase monitoring through: assuming monitoring positions on audit and corporate governance committees, promoting better board attendance, and demanding greater accountability from managers for poor performance.(Gul, Srinidhi and Ng, 2011)
On the other hand there are some arguments that suggest women in the board can create problems for corporations and boards. Westphal and Milton (2000) argue that the presence of demographic minorities on boards either gender or nationality, is often viewed favourably by corporate stakeholders. There is however a more pessimistic view about the extent to which demographic minority directors can successfully influence group decisions(Westphal and Milton. 2000). Secondly Westphal and Milton suggest that a central finding they found in the literature is that demographic differences lower social cohesion between groups and
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turnover as well as creativity and innovation. This could suggest that the influence of women on boards have no influence on CSR or corporate reputation, because women barely influence processes in the board. Even more so, a bad communication strategy might hamper the impact of gender diversity in the board.
While a single female director may have a positive impact on the reputation of a company, there are also some challenges. Groups with a single minority member may consider that minority member to be a souvenir; they may see the minority individual as less competent and of having lower status. As a result, the group may fail to take the minority members seriously (Brewer and Kramer, 1985; Kanter, 1977; Lord and Saenz, 1985). Furthermore, research suggests that minorities have difficulty with expressing themselves and are not easily heard in groups (Nemeth, 1986). A possible reason for this is that social pressures encourage
conformity with the majority’s opinion. However, a group is more likely to take opinions of the minority into consideration and learn from them, when the group is confronted with consistent opinions from multiple members of the minority (Asch, 1955). Evidence suggests that these processes may also be at play on boards. For example Bear et al(2010) state, “when a critical mass of women (i.e., at least three) is represented on a board, female directors are able to ask challenging questions and work together to demonstrate collaboration in decision making” (Konrad et al., 2008; Kramer et al., 2006). It is also possible that there could be too many women on the board and as a result they are not a minority. Consequently, just as a board with only male directors lack diversity and reduce board effectiveness, all female directors would lack diversity and reduce effectiveness as well. In Fortune 500 companies today, however, most boards have fewer than three women and representation of more than four is rare (Bear et al, 2010). This could have ramifications for my research in that having only one woman on the board could have no additional effects on CSR and reputation, when using CSR as a mechanism, because this woman is not being heard in the board.
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favorable work environments (Bernardi et al. 2006) and higher levels of environmental CSR. (Post et al., 2011) Finally, the presence and the number of women on boards may signal to stakeholders that the firm pays attention to women and minorities, and is, therefore, socially responsible (Bear et al 2010). For all of these reasons, we expect the following hypothesis to hold true.
H2: Companies that have more women on the board of directors have higher ratings in CSR
The third hypothesis is derived from the research of Bear et al.(2010) in which they claim that CSR is a good predictor of reputation, they argue that stakeholders value a positive image in CSR and actions that demonstrate CSR can enhance corporate reputation. Branco and Rodrigues (2006) argue that CSR enables firms to improve their reputation with some stakeholders including customers, suppliers, competitors, bankers, and investors.
Furthermore, having more women on the board enhances a firm’s reputation (Bernardi et al., 2006; Brammer et al., 2009). This relationship presumably exists because of the increasing stakeholder pressure towards board diversification (Ramirez, 2003; Sellers, 2007). The third hypothesis therefore tries to find if CSR is the mechanism used by women to influence corporate reputation.
H3: Corporations with more women in the board have a higher Corporate Reputation.
In a study about the influence of CEO characteristics, including gender, Manner (2010) found that some CEO characteristics influence Corporate Social Performance (CSP)(Manner, M H., 2010). Manner found that a bachelor’s degree in humanities, having a breadth of career experience and being female has a positive influence on Social Performance measured by the KLD ratings. The KLD ratings were created by Kinder Lindbergh and Domini and are the ratings most used for CSR today. However the reasons of why a female CEO would influence CSP are not extensively explained and the percentage of female CEO’s in his sample is low (3%). However, looking at the reasons of why women in the board influence CSR
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CFO’s are also influential within companies. For these reasons the following hypotheses are proposed:
H4: Having a female CEO positively influences CSR ratings H5: Having a female CFO positively influences CSR ratings
Methods
Data
The sample was drawn from the Forbes 2000 list and is selected on sales. These companies are in the frontline of business due to their size and have a lot of publicly available data. The scope of this research does not allow a sample that is very big due to time constraints in analyzing the data that this will generate and the resources available for executing this research. Therefore the choice falls on the 150 biggest companies in the United States of this list ordered by sales. After obtaining all the relevant data for these 150 companies it appeared some data was not obtainable and therefore the sample was reduced to 121 companies.
First, secondary data will be obtained on the composition of the boards of directors from the companies in the sample. These are often publicly available on corporate websites and are therefore easily accessible.
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from the data, if she replaced another woman we keep her in the data. This, because it still means that in the previous years there were the same amount of women in the board. This approach is chosen because when elected in 2012 the period of having influence on policy is short and probably little and the data collected for my research is recent data but 2012 has not finished yet and thus some data is based on 2011. Therefore the women that were assigned to the board in 2012 could not have an influence on 2011.
When analyzing the data, I found that some corporations hold public policy or CSR committees for board members. One might expect that companies with these committees value CSR more than other companies and thus these committees could influence CSR ratings. Therefore these committees are added to the sample and analyzed for their effect on CSR.
Secondly, a reputation ranking is needed. There are two approaches to creating a reputational ranking, one is measuring corporate reputation in relation to CSR by finding measures that researchers suggest as indicators of reputation. However, this approach is difficult, since I cannot survey all stakeholders in such a scale to get them to rank the corporations in reputation, so that it will have reliable and valid results. The second approach is to take existing rankings that are available and accept the reputation results as meaningful regardless of the underlying indicators of corporate reputation that were used.
The second approach is used in this research and has the added value of being replicable. This research will use the MAC ranking (Most Admired Companies) and the ACSI (American Customer Satisfaction Index).
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However the MAC ranking according to previous research is highly influenced by corporate financial performance (companies that perform good have a better reputation than companies that perform bad) and so we also need to gain data on financial performance to control for the effect of financial performance on reputation (Brown and Perry, 1995; Fombrun and Shanley, 1990; Fryxell and Wang, 1994; McGuire et al, 1988).
A second negative aspect of this ranking is that it does not incorporate the customer
perception of the company, therefore the ACSI (American Customer Satisfaction Index) will be used as a supplement. This data set is based on interviews that include questions relating to customer expectations, perceived quality, perceived value, customer complaints, and customer loyalty. The results of the survey are factored into a cause effect model that yields a single customer satisfaction rating. As such, these data offer a solid measure of another stakeholder’s view (i.e., the customer stakeholder) (Mahon & Wartick. 2012). One of the limitations of these rankings is that it comes from a secondary source. As a result the rankings might not necessarily measure what we want it to measure, but they are the best alternatives. These two rankings are necessary, because Mahon & Wartick (2012) found that businesspeople who rate the MAC rating, rank companies in a different way and over time in different directions than do the customers of the ACSI ranking. This means that a reputation over time for one
company is different and changes differently over time between customers and
businesspeople (Mahon & Wartick, 2012). For example a company can gain in reputation on the MAC ranking in 2011, but go down in reputation on the ACSI ranking. In addition to the reputation ranking we will need data on Stock price and return on assets (performance measures), which is available through DataStream, as well as industry type.
Thirdly, we need a measure for CSR to rate the companies on CSR. To measure CSR most researchers use the Kinder, Lydenberg, Domini (KLD) social ratings data.
Unfortunately access to KLD is restricted and was not available.
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impact that these issues and risks may have on corporate financial performance. MSCI ESG IVA scores and ranks corporate management of key issues relative to sector peers using a best-in-class ratings system, on a seven point scale from ‘AAA – CCC’ The profiles also provide analysis, data points, and granular scoring on environmental, social and governance metrics. For this paper the combined scores of environmental, social and governance will be used which MSCI combines in an industry adjusted rating which results in the AAA – CCC rating.
Due to the fact that CSR is difficult to measure and institutions that measure CSR often use different indicators for CSR results might not be consistent between different CSR rankings. Therefore a second CSR rating scheme will be used which is provided by CSRHUB. We will use this rating scheme, because it is an aggregate of multiple CSR sources such as Thomson Reuters, Newsweek, Glassdoor and more. CSRHUB tries to interpret all the data that all these different institutions have and create an aggregate score for the companies. CSRHUB is a fairly new institution for rating CSR and it tries to overcome the difficulties that nowadays exist with rating companies on CSR. The problem that exists is that all these institutions use different indicators and different scoring systems, which often generate different outcomes when comparing it to the other institutions. CSRHUB tries to normalize these scores and then creates scores based on the information given by these other institutions. One problem of CSRHUB is their validity since they are a new institution and therefore little literature made use of this rating scheme to evaluate the methodology. By taking two ratings we hope to see if the results are the same for the different rating schemes.
26 Statistical Analysis
To test the relationships in the conceptual model path analysis will be used. The effect that women have on CSR and in return CSR on reputation has to be investigated. In order to investigate these relations path analysis is a suitable candidate. The analysis of the relations requires using steps and path analysis can provide the option for analyzing the steps. The first step is to analyze whether gender diversity influences CSR and the second step is to see if CSR influences corporate reputation. However, beforehand the direct relationship between gender diversity and corporate reputation has to be investigated to see if gender diversity influences reputation.
In the results section we will first at some descriptive results and correlations to see how the variables relate to each other. The second step is regression analysis to see whether the hypothesis are supported and will start with the effect of gender diversity on corporate reputation. Then the effect of CSR on reputation and the effect of gender diversity on CSR will be tested. Additionally we will look at the effects of the gender of the CEO and CFO and CSR committee on CSR ratings. Based on the results we will answer the subquestions. Finally, bootstrapping will be performed and we will investigate the effects of gender diversity per industry.
The dependent variable in the model will be the corporate reputation rankings explained before. Since two rankings are being used we have to run the models twice to see how the customer reputation index (ACSI) and the businesspeople reputation index (MAC) are influenced unless these dependent variables correlate highly together and thus are interchangeable.
CSR is both a dependent and an independent variable, since we have to measure the influence of gender diversity in the boards on CSR and then in return CSR’s influence on corporate reputation.
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Other control variables are industry type to see how the results differ between industries. The MAC(Most Admired Companies) reputation list is influenced by the financial performance of the company(Bear et al, 2010) we therefore have to control for financial performance of the firm. To control for the financial performance return on assets and the change in stock price will be used. This will help control for the fact that a good performing firm also often has a good reputation as a result of their financial performance. Finally, Lehn, Patro & Zhao (2009) identified firm size as a determinant of board composition and will therefore also be used as a control variable by looking at market value of equity and revenues.
Results
Table 1 shows descriptives about the variable of gender diversity in the board and the size of the board. The maximum amount of women found in the board is 5 and the maximum size of boards is 18. Some companies added an additional woman to the board in either 2011 or 2012 this has not been calculated in. Normality tests (not shown) showed that the MAC rating is normally distributed and also the ACSI rating was normally distributed as both dependent variables (P<0,1).
Table 1
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up till 18. The mean amount of women on boards is 2,16 with a range of 0-5 and a standard deviation of 1,065. The average reputation rating for 2012 according to the MAC list is 6,46 with a standard deviation of 0,93 and a range of 3,36-8,42. For the IVA ratings we see that we have some companies in the sample that are the best in their class and some that are bad (range 0-10). The ACSI reputation ranking only has a sample of 60, these are companies of the original sample that have been rated by ACSI. The other companies are not rated by ACSI.
Next we will look at the correlations between the financial performance control variables. The selected variables are return on assets, procentual stock price change over a year, the profit companies made according to fortune and the market value in 2011. These correlations are performed to prevent multicollinearity at later stages. The results show that Market value (which is used for firm size) and Profit are highly correlated (,864) and stock price change is not correlated with any of the other variables. Revenues and Market value are correlated as would be expected since they both measure firm size (,626). When controlling for financial performance we will use ROA and stock price change and for size we will use Market value of equity.
Table 2
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therefore the correlation is there but not very strong, due to the different methodologies these data sources use. Furthermore the 7 point scale is highly correlated with the IVA industry adjusted rating (0,982), therefore we will use the industry adjusted rating and CSRHUB for the remainder of the analysis.
We will continue to correlate all the relevant variables with each other in table 4. For this correlation we will use the dependent and independent variables. This will include the variables for gender diversity, board size, CSR committee and CEO and CFO. In table 5 we correlated the reputation rankings with the financial indicators (market value, Stockprice and Return on Assets) this because the MAC reputation ranking has been said to be influenced by financial performance.
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diversity within boards (,204 and ,225). The gender of the CEO is also correlated with the CSR ratings (,240 and ,212 for IVA and CSRHUB).
For the correlations between the financial indicators and the variables on reputation (table 5) we find that reputation(MAC) and ROA have a correlation coefficient of 0,567 and also stockprice and market value correlate with the MAC (,326 and ,454). For the ACSI rating correlation is only present for return on assets (,375). These results are unsurprising since previous research explained that the MAC is influenced by financial performance.
31 Table 5
Tables 6 and 7 give the results of the regression analyses of the influence of gender diversity on reputation as a direct link. The results show that having more women on the board does not statistically influence corporate reputation as rated by MAC although the coefficient is
positive but low. This would mean that signalling theory for this sample is not applicable. For the ACSI rating there is a significant relationship between gender diversity and corporate reputation, which corroborates the results of Brammer et al (2009) who claimed that
companies that deal with end consumers need to reflect the customer base. Hypothesis 3 and sub question 1 that predicted a positive relationship between gender diversity and reputation is therefore not supported for the MAC rating but is supported for the ACSI.
32 Table 7
Based on aforementioned correlation results (table 4) there is reason to believe that women might influence CSR ratings for CSRHUB and CSR ratings might influence reputation. Regression results of the effect of CSR on corporate reputation are provided in tables 8 and 9. Before these results were found, correlations were performed for the MAC reputations for 2010-2012 with each other and found they are highly correlated (Pearson > 0,75) which suggests that the reputations move in the same direction and that changes in the reputations are little. The results in table 8 indicate that CSR does not have an influence on reputation as the CSR variable is not significant in the model.
Subquestion two that tries to find the relation between CSR and reputation has to be answered negatively, there is no significant relation between CSR and reputation. Corporate reputation measured by the MAC data is influenced by financial performance as research indicated. The adjusted R square explanatory power is mostly caused by the financial performance of the company.
33 Table 8 Dependent variable MAC Reputation
Table 9 dependent variable ACSI Reputation
34 Table 10 (dependent variable CSRHUB)
Table 11 (dependent variable AVI CSR ratings)
There is one problem with the results between gender diversity and CSR which is
endogeneity. As discussed before there is the possibility that because companies are behaving
socially responsible they have more females in the board. To control for this factor you could use gender diversity as a lagged variable. However, this is difficult because directors of boards can have their position for years which makes lagging a variable difficult if the variable might not differ as much from years before. The first step for endogeneity is to control whether the error terms of the independent variable (gender diversity) correlate with the dependent variable (CSRHUB and MSCI IVA). For this we use the Durbin Watson test on the regression analysis between gender diversity and CSR. The result is a Durbin Watson of 1,862 and 2,282 which is above 1 and thus we conclude that there is no need for endogeneity tests since there is no reason to assume that there is positive auto-correlation.
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regression results for this sample. This leads to the assumption that the result of what Bear et al (2010) found is not applicable on the sample of biggest companies in the United States of America.
Previous research argues that the influence of one female in the board is limited (Bear et al, 2010; Konrad et al, 2008; Nemeth et al, 1986). Therefore, we can look at the influence of gender diversity within boards with at least 2 females to find stronger relationships. To investigate this relationship a dummy variable is created for gender diversity for which the value 0 is given to companies that have 0 and 1 female on the board for the boards with 2 or more women on the board the values remained the same.
The results are shown in table 12. The results for CSRHUB are still significant and thus gender diversity influences CSR. The results for the MSCI AVI ratings are still insignificant although the significance level improved compared to the previous analysis on gender diversity (,136 vs ,172). Therefore it might be true that having more than one female
influences CSR stronger. Signalling theory has also been tested and the results indicated that having 0 or 1 female on the board did not significantly influence CSR ratings nor reputation (results not shown), which leads to believe that signalling theory is untrue.
Table 12
The data also contains information on whether or not the CEO/CFO is a female or not and whether the company has a CSR committee in their governance program. These variables (committee/CEO/CFO) are regressed on CSR ratings and not on reputation, since we already have shown that CSR does not influence reputation. The results of the regression on
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When using bootstrapping the effect of the significance of the committee goes down and that of the CEO becomes stronger and for the CFO it becomes significant at the P<0,1 for the CSRHUB ratings. The results indicate that when a company values CSR, they could hire a female CEO to increase CSR.
Table 13
Table 14(bootstrap)
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The relationship between CSRHUB and corporate reputation did not change, CSR still did not influence reputation as shown in table 16. Furthermore, the influence of gender diversity on CSR is still supported. This confirms the suspicion that CSR does not directly influence reputation in this sample. The result on the ACSI rating was the same as on the MAC reputation rating in which CSR did not influence reputation.
Table 15
Table 16
For the next step we will look at the results per industry. The sample consists of multiple industries, however to do statistical analysis the industry has to occur multiple times. Care has to be given to the validity of the results due to the fact that most of the industries occur only few times, therefore only industries are selected that occurred more than 10 times. Some were combined into one industry, so that there are extra industries with more than 10 companies (e.g. health insurance and property insurance). This leaves the industries:
- Petroleum/Energy/Oil
- Health/Life/Property insurance - Commercial Banks/Financials - Computer sector/Internet
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The industries consist of 10-13 companies and tables 17 and 18 show the results for the regressions on CSR and reputation. Due to the small quantity of companies per industry and to be more parsimonious only 1 control variable will be used. Gender diversity and board size are used in the regression with CSR and CSR and ROA for the regression with reputation (MAC). The results show that for gender diversity and CSR there is no relationship. The results on reputation show that return on assets is insignificant in most of the regressions. The results seem to show that CSR for the industries in this specific sample is not significantly influenced by gender diversity as was shown for the sample in total. A possible reason for this effect is that the samples per industry are too small to create a normally distributed sample. Due to the small samples the number of observations and the variance between companies is probably not big enough to create useful differences to analyse.
Table 17
Table 18
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diversity in companies that deal with end consumers, we can therefore look for a difference between these two categories. The results (table 19) show that the companies rated by the ACSI their CSR ratings are not influenced by gender diversity and the companies not rated by the ACSI are influenced by gender diversity. The influence of CSR on reputation remains not significant in both cases. Consequently we can argue that there are differences between industries when it comes to the influence of gender diversity on CSR.
Table 19
Discussion
This paper tried to build on the research done by Bear et al (2010). Bear et al found that women in the board of directors influence CSR in a positive way and through influencing CSR women influence reputation. The literature identified possible reasons for this
phenomenon in that women bring different perspectives to the board and often have a more social background.(Bear et al., 2010)
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would be more accurate when looking at industries instead of a whole sample which contains different industries. MSCI AVI rates companies in comparison to competitors in the same industry. This still means that companies are good in CSR within their industry, however it is harder to compare with companies from other industries.
Hypothesis 2 in which companies that have more females on the board of directors have higher ratings in CSR has been supported. Consequently we might argue that women bring different perspectives to the board and that women are more likely to be support specialists and community influencers as identified by Hillman (2002). Researchers also found that gender diverse boards are associated with higher quality board deliberations and discussion of tough issues that all-male boards often regard as off limit (Stephenson, 2004; Clarke, 2005; Huse and Solberg, 2006; McInerney-Lacombe et al., 2008). When a company strives to be a good corporate citizen in society it can be fruitful to have a gender diverse board and a female CEO, however this does not necessarily lead to a better corporate reputation.
One possible problem identified in the literature is endogeneity, because there is the possibility that an ethical company would also reflect that in the workforce and thus have more gender diversity. After conducting the Durbin Watson test to see whether the error terms correlated with each other the conclusion is that endogeneity is not a problem in the results. The previous analyses demonstrates that the question about whether or not being good in CSR brings benefits is still relevant. Researchers have had mixed results for years and the previous analysis shows that, being better in CSR than other companies does not have a significant beneficial effect on corporate reputation and compared to Bear et al(2010) creates mixed results as well.
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business (Hillman et al., 2002). Furthermore women are more likely to be support specialists and community influencers (Hillman et al., 2002).
Finally, the results per industry showed no significant results. However a reason for this is probably that the quantity of companies per industry was to low and thus normality could not be created and this resulted in regressions showing no significant results. Therefore to see whether or not there were differences in industries the sample was split by using the ACSI rating as a reference which contains companies that are in contact with end consumers. The results for the ACSI companies showed no significant relationship between gender diversity and CSR, however for the companies not rated by the ACSI, CSR ratings were influenced by gender diversity in boards. This leads to believe that there are differences between industries.
Previous research argued that having women on the board signals to investors that the
company is behaving responsible and thus reputation should be higher (Bernardi et al. 2002). The results of this paper support the findings of Bear et al (2010) in that having women on the board does not necessarily signal to investors that the company is behaving responsible. Having one female on the board in comparison to 0 did not signifcantly influence CSR ratings.
Literature has given good reasons to assume that women can influence policy within a company and thus also CSR policy. The literature also gives reasons why CSR could
influence reputation. Among the reasons is the ability of a firm to demonstrate a high level of CSR. This high level of CSR then signals to the stakeholders, that the firm will behave in accordance with their expectations which can increase reputation. However, for the American sample used in this research CSR does not influence the reputation of the companies.
One explanation for the results found in the analyses for the MAC reputation is the methodology behind the rating. The MAC reputation rating is formed by asking
businesspeople about what reputation they would give a company and as has been shown this reputation ranking is influenced greatly by financial performance, they might not be interested in the CSR performance.
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poor use of shareholder money. Authors such as Wood(1992) and Tepper (1993) find evidence that social responsibility is associated with below market returns and other papers find that there is no relation between CSR and performance (e.g. Statman, M. 2000; Bauer, R., Koedijk, K and Otten, R. 2005). As research shows mixed results about the effect of CSR on financial performance, the people that rate the MAC might argue that CSR is a waste of capital and therefore take into consideration this performance, but view it not necessarily in a positive light or grade companies in a similar way which creates no big differences.
The other reputation rating scheme is the American Customer Satisfaction Index (ACSI) and deals with customer satisfaction, the sample for this rating was smaller because it only deals with end consumer companies. The regression results showed that CSR does not influence these ratings either. A reason for this can be the methodology that the ACSI uses. The
methodology is mostly about the customer expectations about a company’s product or service and how that influences perceived quality and perceived value. Another part of the
methodology is how the company handles customer complaints and how that leads to customer loyalty. CSR has in this methodology perhaps no direct influence on the
expectations that customers have on the quality of the product/service. Therefore, CSR might not influence the ACSI rating due to the fact that CSR does not play a role in how the scores are established.
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Even though the MAC reputation rating has an aspect of social responsibility (1 of the 8) the differences in quiet times on this social responsibility might be too small. Most of the
companies in the sample did not incur big adverse events and therefore their CSR reputation has been passive and when companies are rated on their reputation by consumers and business executives, directors, and analysts they do not weigh CSR heavily.
Thirdly, an explanation might be found in the size of the companies and norms that society put on the corporations. Compared to the U.S. in Western Europe the governments have become increasingly active in promoting and shaping CSR (Steurer, R., Martinuzzi, A and Margula, S. 2012). Whereas in the U.S where there is a liberal market economy the
companies carry more of this responsibility (Apostolakou, A & Jackson, G. 2009). In the U.S. the focus lies more on corporate philanthropy and doing voluntary corporate activities (Hall, M. 2008). Most of the CSR reports, report extensively on volunteerism and what the
companies mean for society.
Society in the U.S puts pressure on the companies to act accordingly and they expect
companies to take over the role of government (e.g. pension plans, health benefits). Research found that consumers are willing to pay higher prices for products made by an ethical
company (Creyer & Ross, 1997), to switch brands to support companies that make donations to non-profit organizations, and to buy products from a company simply because it supports charitable causes (Smith & Alcorn, 1991). The companies chosen in this sample have great interest in conforming to these standards, which reduces differences between companies.
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need to conform to this standard of CSR to maintain their legitimacy to operate (license to operate) in the eyes of consumers (Stanaland, A., Lwin, M and Murphy, P. 2011).
Finally, the results also showed no significant relationship between gender diversity and corporate reputation for the MAC ratings. The ACSI ratings as expected from the results of Brammer et al (2009) were influenced by gender diversity as these companies deal with the end consumer and the board should reflect the customer base. Here lies also a possible reason for why the corporate reputation measured by MAC was not influenced by gender diversity. These companies are not rated by customers but by businesspeople. These businesspeople do not require a company to reflect their customer base and thus they will look at the impact women have on the outcomes of a company. Research has had mixed results mostly negative about the influence of gender diversity on financial performance and any conclusive results have yet to be found (e.g. Carter, D A., D’Souza, F., Simkins, B J and Simpson, G W, 2010; Jhunjhunwala et al, 2012). Arguably this explains why gender diversity did not influence reputation, because the addition of women to the board has no influence on outcomes. Therefore businesspeople might not take into consideration gender diversity in establishing a corporate reputation.
Managerial implications
The results found in this paper show that for the top companies in the United States efforts in CSR don’t show a differential reflection on reputation for these companies. However, the results do show an effect of women on CSR ratings. As said before when a company puts high value on being responsible and being seen as responsible, taking on women on the board and having a female CEO can reflect better CSR policy. Looking at the future it might be very interesting for companies to be more active in CSR. With the increased public scrutiny and the demands society has for companies in the world in making affordable products, but also on being good for society and the planet, companies might invest more in CSR. Having a gender diverse board might help incentivise CSR policy and creates better CSR ratings.
Conclusion and Limitations
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positive way. Bear et al found these results in the health sector. This research tried to find if the results found by Bear et al are also consistent for other samples and industries. The results show that gender diversity in boards does influence CSR ratings in a positive way for the CSRHUB ratings as does having a female CEO. However, there was no significant relationship found between CSR and corporate reputation. Furthermore, we looked at the different industries that were found in the sample and ran regressions on them to see if the effects found by Bear et al (2010) hold true for different industries. The results showed that there was no significant effect between gender diversity and CSR nor between CSR and reputation. There were however differences when we separated consumer oriented companies from the others by using ACSI as a reference and found that CSR is influenced by gender diversity for companies that are not rated by the ACSI. This implies that there are differences between industries.
One of the limitations of this study is that it does not use the KLD ratings which are most commonly used in researches about CSR. This data was not available and therefore, AVI MSCI and CSRHUB were used. The first one is a rating that is used by MSCI to assess risk that companies are encountering in the area of CSR. The latter rating is an aggregate rating of different CSR rating schemes. The sophistication of the KLD rating however is highly
credited and would therefore be better to use also to create consistency with other researches to make results more accurate.
A second limitation of this research is the sample size when the regressions where used on the industries. Although the results point out that reputation is still influenced by financial
performance, the normality within the industry samples is low and even after bootstrapping normality is hard to achieve and therefore the results on the different industries are of low validity and thus for further research the sample should be greater so that you can actually get valid results and look at the differences between industries, however this research can be used as an indicator. Furthermore, for the MSCI ESG AVI ratings industry is a very important aspect since these ratings are based on comparing companies within industries on the different CSR variables.
