Women on Board Effect: How to do it? Perempuan dalam Dewan Direksi: Bagaimana melakukan risetnya?

Women on Board Effect: How to do it?

Women on Board research is an interesting research considering the issue of gender equality. However, the role of women in firms has not extensively and empirically discussed like other corporate governance issues. Research has found that women may change the board room situation because women are more cautious than male on board in corporate decisions making (Huang and Kisgen, 2013 and Levi et al., 2013). Laura Tyson, a former economic adviser to US President Bill Clinton, recommended the improvement of board diversity to increase firm’s financial performance through the number of women on board (Tyson, 2003). Adams and Ferreira (2009) studied 1500 companies at United States from 1996-2003, and found female directors have significant impact on corporate performance of firms with weak shareholders right. They stated that female directors are more likely to monitor their committees. As the greater the gender diversity, the directors have fewer attendance problem. Therefore, this issue should be explored more in the future

What theory to use?

We can link agency theory or Resource base view theory in this research. In agency perspective, agents (managers) are risk averse due to concerns about their own undiversified human capital, and it may induce risky choices through various corporate governance mechanism. In other words, an undiversified human capital board may lead to undiversified risky choices. Meanwhile, In the perspective of resource base view theory, the diversified human capital in board may become a strategic resource for firm.

However, psychology literature shows that women tend to be more averse to risk than men (Byrnes et al, 1999), yet men are more likely to be involved in ‘risky experiments’, ‘intellectual risk taking’ and ‘gambling’ than women. Further, women are more conservative in making investment decisions (e.g., Bernasek and Shwiff, 2001; Croson and Gneezy, 2009). Therefore, to reduce the agency cost, it is important to have board diversity by combining men and women in the same board.

 How To measure Women-on-Board?

The Women on Board is measured by the percentage of women on board divided by the total number of directors sitting on the board. The corporate governance studies that used percentage of women on board to represent the board gender diversity are Rose (2007) and Erhardt, Werbel and Shrader (2003). So the steps are:

1. Download annual report
2. Check the director (usually the give the photographs too)
3. Count how many women
4. Divide it with total number of board

Perempuan dalam Dewan Direksi-Komisaris: Bagaimana melakukan risetnya?

Pertama tama, saya harus menjelaskan ada perbedaan definisi mengenai “BOARD” di luar Indonesia, dan “BOARD” di Indonesia. Di luar Indonesia, BOARD itu mencakup direksi dan komisaris. Sementara itu, BOARD di Indonesia itu hanya dewan direksi. BOARD di sini adalah gabungan Direksi dan Komisaris. Secara de jure, fungsi direksi dan komisaris itu berbeda. Tapi secara de facto, beberapa komisaris di Indonesia memang tidak terlihat berperan. Oleh karena itu, kita abaikan dulu masalah de facto tersebut.

Penelitian Women on Board adalah penelitian yang menarik mengingat isu kesetaraan jender. Namun, peran perempuan dalam perusahaan belum secara ekstensif dan empiris dibahas seperti isu-isu tata kelola perusahaan lainnya. Penelitian telah menemukan bahwa wanita dapat mengubah situasi ruang direksi karena wanita lebih berhati-hati daripada pria dalam pembuatan keputusan perusahaan (Huang dan Kisgen, 2013 dan Levi et al., 2013). Laura Tyson, mantan penasehat ekonomi untuk Presiden AS Bill Clinton, merekomendasikan peningkatan keragaman dewan untuk meningkatkan kinerja keuangan perusahaan melalui jumlah perempuan di dewan (Tyson, 2003). Adams dan Ferreira (2009) mempelajari 1500 perusahaan di Amerika Serikat dari 1996-2003, dan menemukan direktur wanita memiliki dampak yang signifikan terhadap kinerja perusahaan perusahaan dengan pemegang saham yang lemah. Mereka menyatakan bahwa direktur perempuan lebih cenderung memantau komite mereka. Ada juga temuan bahwa semakin besar keragaman gender, para direktur memiliki lebih sedikit masalah kehadiran (board meetings).

Teori apa yang digunakan?

Kita dapat menghubungkan teori agensi atau teori Resource Base View dalam penelitian ini. Dalam perspektif teori agensi, agen (manajer) adalah seseoorang yang risk averse yang mana mereka khawatiran tentang keragaman sumber daya manusia mereka, dan hal ini dapat menimbulkan pilihan-pilihan yang berisiko melalui berbagai mekanisme tata kelola perusahaan. Karena semua agen memiliki perspektif yang sama dalam mengambil keputusan. Sementara itu, dalam perspektif teori Resource Base View, sumber daya manusia yang beragam dalam dewan direksi-komisaris dapat menjadi sumber daya strategis untuk perusahaan.

Namun, literatur psikologi menunjukkan bahwa perempuan cenderung lebih menolak risiko daripada laki-laki (Byrnes et al, 1999), namun laki-laki lebih cenderung terlibat dalam ‘eksperimen berisiko’, ‘pengambilan risiko intelektual’ dan ‘gambling‘ daripada perempuan. Lebih lanjut, wanita lebih konservatif dalam membuat keputusan investasi (mis., Bernasek dan Shwiff, 2001; Croson dan Gneezy, 2009). Oleh karena itu, untuk mengurangi biaya agensi, penting untuk memiliki keragaman papan dengan menggabungkan pria dan wanita di papan yang sama.

Bagaimana Mengukur Women-on-Board?

Women on Board diukur dengan persentase perempuan di dewan direksi-komisari dibagi dengan jumlah total dewan tersebut. Studi tata kelola perusahaan yang menggunakan persentase perempuan di dewan untuk mewakili keragaman gender adalah Rose (2007) dan Erhardt, Werbel and Shrader (2003). Jadi langkahnya adalah:

1. Unduh laporan tahunan
2. Periksa daftar direksi (biasanya yang memberi foto juga)
3. Hitung berapa banyak wanita
4. Bagilah dengan jumlah dewan

Don’t forget to read my research related to this topic (Message me in researchgate if you cannot retrieve my paper online):

• Brahmana, R., & Chen, S. N. (2016). The Role of Women Directors for Malaysian Firms’ Performance. In Revealing Gender Inequalities and Perceptions in South Asian Countries through Discourse Analysis(pp. 121-136). IGI Global.
• Brahmana, R. K., Razali, M. W. M., & You, H. W. (2017). The Role of Gender and Ethnic Diversity on the Performance of Malaysian Private Comp. DLSU Business & Economics Review, 26(2), 1-1. (LINK: https://www.researchgate.net/profile/Rayenda_Brahmana/publication/318248471_The_role_of_gender_and_ethnic_diversity_on_the_performance_of_malaysian_private_companies/links/5aab27d20f7e9b8826712cac/The-role-of-gender-and-ethnic-diversity-on-the-performance-of-malaysian-private-companies.pdf?origin=publication_list )

Other references:

• Burgess, Z., & Tharenou, P. (2002). Women board directors: Characteristics of the few. Journal of business ethics, 37(1), 39-49.
• Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. Financial review, 38(1), 33-53.
• Sila, V., Gonzalez, A., & Hagendorff, J. (2016). Women on board: Does boardroom gender diversity affect firm risk?. Journal of Corporate Finance, 36, 26-53.

Happy researching!

References:

• Adams, R. B., & Ferreira, D. (2009). Women in the Boardroom and their Impact on Governance and Performance. Journal of Financial Economics, 94(2), 291–309. doi:10.1016/j. jfineco.2008.10.007
• Bernasek, A., & Shwiff, S. (2001). Gender, risk, and retirement. Journal of economic issues, 35(2), 345-356.
• Croson, R., & Gneezy, U. (2009). Gender differences in preferences. Journal of Economic literature, 47(2), 448-74.
• Erhardt, N. L., Werbel, J. D., & Shrader, C. B. (2003). Board of director diversity and firm financial performance. Corporate governance. International Review (Steubenville, Ohio), 11(2), 102–111.
• Huang, J., & Kisgen, D. J. (2013). Gender and corporate finance: Are male executives overconfident relative to female executives? Journal of Financial Economics, 108(3), 822–839. doi:10.1016/j.jfineco.2012.12.005
• Levi, M., Li, K., & Zhang, F. (2014). Director gender and mergers and acquisitions. Journal of Corporate Finance, 28, 185–200. doi:10.1016/j.jcorpfin.2013.11.00
• Rose, C. (2007). Does female board representation influence firm performance? The Danish evidence. Corporate Governance: An International Review, 15(2), 404–413. doi:10.1111/j.14678683.2007.00570.x
• Tyson, L. (2003). The Tyson Report on the Recruitment and Development of Non-Executive Directors. Report to the UK Department of Trade and Industry

HOW TO DO IT?

1. Usually, you will look at picture in annual report like this one. This is from Indofood annual report 2015:

So the Women on Board = 1 / 10 = 0.1

2. If the annual report only provides name, you should be creative. Check the name one by one in Bloomberg or Linkedin. This is the example (Tempo Scan Pacific 2015 annual report):

We want to know whether Dian Paramita Tamzil is female or Male. Then, go to bloomberg or linkedin. Search that name. Make sure that name works in that company. For this example, we found that Dian Paramita Tamzil is female

Do it for the rest. Don’t be lazy. haha