Disentangling Discrimination on Spanish Boards of Directors

• Published date: 01 January 2011
• DOI: http://doi.org/10.1111/j.1467-8683.2010.00837.x
• Author: Ricardo Gimeno,Lorenzo Escot,Ruth Mateos de Cabo
• Date: 01 January 2011

Disentangling Discrimination on Spanish

Boards of Directorscorg_83777..96

Ruth Mateos de Cabo, Ricardo Gimeno*, and

Lorenzo Escot

ABSTRACT

Manuscript Type: Empirical

Research Question/Issue: This study seeks to f‌ind evidence of discrimination behind the scarce presence of women on

Spanish boards of directors through factors within f‌irms linked with different theories of discrimination.

Research Findings/Insights: Using data on the boards of directors from the top 1,000 Spanish companies in 2005 and 2008,

we identify some signals of discrimination. We f‌ind that women directors are scarcer in those sectors where there are fewer

female managers or where the directors mainly draw on the f‌irm’s executive staff. There is also evidence of the dynamics

of Becker’s theory of discrimination, since time and competition seem to play in favor of a female presence on Spanish

boards. We also f‌ind a contagion effect,implying a positive relationship between the number of women already on the board

and the likelihood of adding a woman. This could signal some kind of underestimation of women’s skills and preconcep-

tions about their attitudes (such as risk-aversion) and hence their capacity to hold these positions.

Theoretical/Academic Implications: This study provides empirical support for the prediction of Becker’s theory of dis-

crimination.The study also furnishes evidence in favor of the existence of falsepreconceptions concerning the skills and risk

attitudes of female managers.

Practitioner/Policy Implications: In order to reduce discrimination before reaching the board we propose to implement

education and mentoring initiatives to improve the training of the female candidates, and to improve the work- and

family-life balance. Once they are included in the pool of candidates the implementation of good corporate governance

practices related to transparencyand objectivity in selection procedures and/or even the establishment of a women’s quota

on boards may contribute to dismiss employers’ negative beliefs about the capabilities of female candidates.

Keywords: Corporate Governance, Gender Discrimination, Board of Directors, Glass Ceiling

INTRODUCTION

The objective of this paper is to f‌ind evidence of gender

discrimination on the boards of directors of the largest

Spanish companies through the analysis of observable

factors related to their presence on boards and their possible

relationship with the different types of discrimination pro-

vided by the literature. To do this, we analyze the composi-

tion (both in 2005 and 2008) in terms of gender of the boards

of directors of the top 1,000 Spanish companies, where we

have found that the mean percentage of women has grown

from 6.6 per cent to 8.6 per cent. When seeking to identify

possible causes of female underrepresentation, we opt to

study determinants on the demand rather than the supply

side. Supply-side determinants relate to the tendency of

women to participate less in the labor market and to their

relative lack of long-term career commitment when com-

pared with men, mainly as a consequence of motherhood,

child care, and the unequal allocation of household tasks. In

looking for these kinds of causes, survey data, such as that of

Bertrand, Goldin, & Katz (2009) are a useful reference.

However, survey data are likely to be biased by the self-

selection of those women who wish to “showcase” their

successful careers1. Besides, once a woman has reached the

top executive rank, it is reasonable to assume that such

supply-side differences are minimized and that such men

and women are likely to be similar, sharing a high level of

job motivation and lofty career ambitions (Bertrand &

Hallock, 2001). Hence, additional causeson the demand side

should be explored.

*Address for correspondence: Ricardo Gimeno, Banco de España, Alcalá 48, Madrid

28014, Spain. Tel: +34 913388006; Fax: +34 913385624; E-mail: ricardo.gimeno@

bde.es

77

Corporate Governance: An International Review, 2011, 19(1): 77–95

© 2011 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2010.00837.x

The study of gender discrimination on the boards of direc-

tors of Spanish companies is important for a variety of

reasons. Firstly, in today’s corporate world, gender diversity

has become a relevant topic at a time when a number of

market regulators are considering quotas for women on

publicly traded companies’ boards as a requirement in their

Codes of Conduct, and when improving governance is a key

issue for f‌irms to survive in a global crisis. In Spain this is a

pressing issue since the government, by introducing in 2007

the “Equality Law” (Constitutional Act 3/2007 of 22 March

2007 for Effective Equality between Women and Men), has

undertaken to increase female representation on publicly

traded companies’ boards to 40 per cent by 2015, although

this female quota is not mandatory, but merely a recommen-

dation. Secondly, the study of women’s representation on

boards is especially interesting as an extreme case in the

broad research of possible causes of discrimination against

women in the labor market. In fact, many studies (Adams &

Ferreira, 2004; Carter, Simkins, & Simpson, 2003; Farrell &

Hersch, 2005) have addressed the differences in gender and

race compositions of boards of directors. Terjesen, Sealy, &

Singh (2009) offer a thorough review of the literature on

women on corporate boards. And f‌inally, the causes of dis-

crimination in labor markets remain an open issue, where no

clear evidence has been found to favor one theory over

another. Indeed, the characteristics of the different types of

discrimination are usually mixed and distorted by elements

of segregation (vertical and horizontal) in the labor market.

In view of this, the key is to identify the type of discrimina-

tion that occurs in the labor market since different kinds of

discrimination have different economic implications and

imply diverse policy actions for policymakers.

The Spanish case offers a suitable setting for distinguish-

ing among different causes of discrimination. In the Spanish

business environment, women’s economic integration

remains a cause for concern given the marked lack of

women in the higher decision-making positions (de Anca,

2008). While data from the quarterly survey of the labor

market conducted by the Spanish national statistics off‌ice

show that female participation in the Spanish labor market

has steadily increased from 28 per cent in 1976 to 44 per cent

in 2009, the same increase is not observed in directorships

and, especially, on boards of directors. According to the

World Economic Forum 2009 Gender Gap report (Haus-

mann, Tyson, & Zahidi, 2009), Spain ranks 90th out of 134

countries in terms of Economic Participation and Opportu-

nity and 120th in terms of wage equality. In this sense,

according to the Spanish Women’s Institute’s 2006 data,

while the participation of women in executive positions of

companies and the public sector is around 32 per cent, it is

only between 6 per cent and 8 per cent on the boards of

directors of the largest Spanish companies in 2005 and 2008,

respectively, according to our estimates (see Table 1 for pre-

vious reports on women’s presence on Spanish boards of

directors). This proportion is one of the lowest among devel-

oped countries. In fact, Terjesen & Singh (2008) shows that

Spain has the 8th lowest percentage of women on boards

among 43 countries studied, ahead only of Japan, Italy, Lux-

embourg, Iceland, Ireland, Austria, and Argentina.

Nevertheless, the disadvantageous economic position of

women in Spain does not equate to that exhibited in other

social realms. In this respect, the WEF report shows that

Spain ranks 9th regarding political empowerment (6th for

women in ministerial positions with 44 per cent female

representation, and 11th in women in parliament with 36

per cent of female members), and in terms of education it

occupies f‌irst position for level of enrolment in secondary

and tertiary education (96 per cent and 76 per cent of all

women, respectively). Therefore, there may be something

in the economic area of Spanish society explaining this

disparity.

Several theories explain this underrepresentation of

women in the corporate world, based on adverse selection

(women’s incentive problems in the labor market) leading to

self-fulf‌illing prophecies about their professional develop-

ment. Moreover, De la Rica, Dolado, & Llorens (2008) f‌ind

evidence that discriminationagainst women plays a key role

in the Spanish labor market when explaining differences

across gender, despite the fact that men and women are

ex-ante identical. Given that outcome, we focus our study on

the possible presence of a “glass ceiling”2(Morrison, White,

& Van Velsor, 1987; Powell & Butterf‌ield, 1994) as a crucial

TABLE 1

Previous Research on Women’s Presence on the Boards of Directors of Spanish Companies

Research Sample Women’s

participation

Boards

without

women

Natividad (2002) 300 companies ranked by operating revenues 4.6% 76%

Ethical Investment Research Service (2004) FTSE All World Developed Index (24 companies) 3.8% –

Félez, Romero, Pueyo, and Llaría (2004) Ibex-35 (35 companies) 3.57% 63%

European Professional Women’s Network

(2004)

250 European companies by operating revenues 3% 60%

Spencer Stuart (2004) 90 Spanish companies 4% 66%

Albert-Roulhac (2005) Ibex-35 (35 companies) 2.6% 69%

Gómez Ansón (2005) 119 Spanish listed companies 4.04% 68.07%

78 CORPORATE GOVERNANCE

Volume 19 Number 1 January 2011 © 2011 Blackwell Publishing Ltd