We have observed the number of female directors as a key factor on board practices to measure how a company is willing to change. The table below shows the correlation analysis between the number of female directors and performance key measures such as ROE (actual), ROA (actual) and Tobin’s Q on the 1,755 companies as of March 31, 2020. We have seen the statistically significant positive correlation between ROE (actual or results) and the factor since we started the correlation analysis with correlation analysis with BDTI in 2017. Now, the factor shows the sign of significance to ROA (actual or results) in this month, updating the data of December fiscal year end companies after AGMs.
The reason we believe the factor is a key factor of the CG criteria is that it is correlated to other factors on board practices as well as performance measures, as shown the table below.
This is the statistical results, but we can imagine how the woman director adding to the board of directors impacts on the culture of a company. The number of woman directors is a part of board diversity that is the data to gather more easily than other diversity criteria. Currently, most of female directors are independent outside directors and very few are executive (inside) directors in the board. However, we believe the factor is a key how seriously a company enhances the corporate governance practices, changing the company. This is the reason we have hypothesized the number of female directors reflects “willingness to change.”
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Please feel free to contact the below email address if any interest or query.
Aki Matsumoto, CFA