Chiara de Amicis, Professor of Finance and researcher at SKEMA Business School, is particularly interested in gender balance at the top management echelons. She tells us more about her work, what surprised her the most and how her research is impacting society.
Could you tell us more about your field of research and particularly your research on gender balance at the top management echelons?
My research is in the field of corporate finance and corporate governance. Traditional empirical research in finance assumes a neoclassical view of the firm in which top managers are homogeneous and perfect substitutes for one another. A more recent literature shows instead that corporate behavior and performance can be influenced by individuals’ specific characteristics and personality traits. My research follows this last strand of the literature, and it focuses on the role that manager gender potentially plays on corporate decision making. There is growing research that studies what behavioral patterns characterize female and male executives. For example, studies suggest that women are generally more risk averse and less keen on being exposed to competition than men. Other studies find that female managers and directors tend to make less risk-taking corporate choices, they are also more sensitive to ethical issues and place more emphasis on environmental and social responsibility issues. Despite such growing research on gender diversity in corporate finance, the question if the gender of managers and board directors explains differences in the governance and performance of firms is still a relevant one as the debate whether, and what type of, initiatives are needed to increase the number of women with leadership roles is still open in many countries.
What results surprised you the most?
In one recently published paper we study whether behavioral differences between male and female executives are associated to differences in sentiment and communication styles of corporate disclosures. Applying textual analysis techniques to a sample of earnings conference calls, we find that female and male managers differ in the way they communicate corporate news. Female CEOs and CFOs are in fact significantly more optimistic and less ambiguous than their male colleagues. This result could seem surprising given the existing literature suggesting that women are on average less overconfident and more risk-averse than men. However, research suggests that communication styles are an important determinant of the ability to affirm one’s authority in executive positions. In this respect, female executives tend be at a disadvantage compared to their male colleagues who are generally much more self-promoting. As a result, the distinctive linguistic style of female executives in conference calls we find might be a consequence of the pressure on female executives to convincingly assert their managerial authority in a male dominated world.
What is the research you are currently carrying out?
Currently, I am working on a research project that studies how different regulatory interventions aimed to improve board gender diversity have impacted on female representation on corporate boards and, consequently, on the effectiveness of corporate boards and on the firm performance. Initiatives for more gender balanced boards of directors have been at the forefront of the policy agenda of most European countries in the past decades. After the pioneering example of Norway, which first mandated board gender quotas in 2006, many European countries have implemented measures to increase the presence of female directors. Several countries, such as France, followed the example of Norway and enacted legislations that mandated gender quotas in boards. Several others, such as the UK, have preferred a softer approach setting a non-binding target ratio often on a “comply or explain” basis. Critics of legislated quotas argued that because of the alleged scarcity of qualified female directors, mandated quotas could result in “over-boarding”, i.e. the few “golden skirts” holding multiple board positions, or the appointment of less qualified directors which could ultimately undermine the board effectiveness. By making a cross-country comparison of the different regulatory regimes across Europe, our research shows that countries that mandated quotas have been more effective at speeding up the increase of female representation in corporate boards than countries with soft or no rules. Importantly, contrary to the arguments of the opponents of gender quotas, we do not observe any distortion created by mandatory regimes on board composition and on the firm performance.
How does this study impact society at large?
The number of women reaching leadership positions increased substantially in the past twenty years. In 2003, female CEOs and directors in the Fortune 500 firms accounted for less than 1.6% and 16%, respectively. Now, almost 9% CEOs and 27% directors are women. In Europe, before the Norwegian gender quotas, female directors were less than 10%. Currently, this share has increased to 31.5%. These figures show that a cultural change is in place and that corporations are becoming more open towards women. However, there are still large margins of improvement. More research on gender diversity in corporate finance is therefore needed to understand whether women in leadership positions are different from their male colleagues and from the other women in the population. Providing an answer to these questions could help reducing firm skepticism to appoint female leaders potentially linked to the belief that women do not have the required managerial qualities to run a business. The research project I am currently working on aims to contribute to this line of research. Our result that enforcing gender quotas has not generated any distortion on the composition and the board characteristics, nor the firm’s performances implies that there exists a sufficiently large pool of qualified women to take leadership roles. Our findings are therefore important to inform the policy debate around the most effective way to promote gender balance in corporations.