South Korea has slipped to the bottom of the Asia Pacific rankings for gender diversity in boardrooms, with female board directors taking only 2.1 per cent of seats, down from 2.4 per cent in 2012. (image: Kobiz Media / Korea Bizwire)
SINGAPORE, March 9 (Korea Bizwire) — A major study that examined 1,000 companies across 10 Asia Pacific economies has, for the first time, associated better firm performance with companies that have at least 10 per cent of their board seats held by women.
According to new findings published in the report, Diversity Matters: Adding Colour to Boards in APAC, boards that have at least 10 per cent of their seats held by women enjoy, on average, a 3.6 per cent higher Return on Equity (ROE) and 1.3 per cent higher Return on Assets (ROA) compared to boards where women make up less than a tenth of directors.
The report is published by Korn Ferry and the National University of Singapore (NUS) Business School’s Centre for Governance, Institutions and Organisations (CGIO). The study is the third in the series and examined annual reports of the largest 100 publicly listed companies in each of 10 selected economies: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Singapore and South Korea. The annual reports were for financial year 2012-2013.
The study found that the regional average for female representation in boardrooms stood at 9.4 per cent, up from 8.0 per cent in 2012, and there were fewer all-male boards in most countries surveyed. However, just 24 out of the 1000 boards had four or more women, and few women were in board leadership roles, with only three per cent of chair positions held by females.
The research also found that Asia’s healthcare industry scored highest for gender diversity, with an average of 13.6 per cent female representation, while the industrials sector had the lowest proportion of women board directors at 5.8 per cent.
There were substantial differences between individual economies, with female board representation ranging from 2.1 per cent in South Korea to 18.6 per cent in Australia. Some countries, in particular New Zealand and China, recorded substantial improvement in gender diversity compared to 2012, while Indonesia, Malaysia and South Korea saw the proportion of women on boards fall.
South Korea: More needs to be done
South Korea has slipped to the bottom of the Asia Pacific rankings for gender diversity in boardrooms, with female board directors taking only 2.1 per cent of seats, down from 2.4 per cent in 2012. Along with Indonesia and Malaysia, South Korea recorded a decrease in female representation in boardrooms, whereas all other economies surveyed recorded an improvement.
The percentage of all-male boards in South Korea has also increased to 84 per cent – the highest proportion in the Asia Pacific – up from 83 per cent. Women account for four per cent or less of boards in almost all of South Korea’s business sectors.
However, the study found that South Korean boardrooms with at least 10 per cent female representation enjoyed, on average, 7.4 per cent ROE, compared to 5.1 per cent at boards with a female representation of less than 10 per cent, indicating that firms in the country have much to gain from having more gender diverse boards. However, only 13 out of South Korea’s largest 100 listed companies have female representation of 10 per cent on their boards.
“What we see in Asia Pacific is still too little of a good thing. We found that more women on boards is linked to better company performance, but too few Asia Pacific boards have substantial female representation. There is significant potential for companies to benefit from greater gender diversity in their boardrooms, particularly in Asian countries”, said Associate Professor Marleen Dieleman, Associate Director of CGIO, NUS Business School.
“Despite the efforts made by governments and organizations, women still remain under-represented on boards in the region. To move towards a balanced representation of women on boards requires a collective effort from all parties. Companies should consider taking concrete steps to improve board diversity by making a deliberate choice to consider female candidates for board positions and start by promoting more women to senior roles”, said Alicia Yi, Managing Director, Asia Pacific Consumer Markets at Korn Ferry.
The report, which includes findings from the other nine Asia Pacific economies, can be downloaded at http://bit.ly/1F1G2Kv.
Source: National University of Singapore (NUS) via ACN Newswire
