Making it to the top just start of long road for women
The next challenge for female directors will be to show they can deliver on profit for their firms
Good news on the affirmative action front last week, with a woman claiming one of the top positions in the financial world.
But that could be the start of a hard road as women now need to show how well they can contribute to the boards of listed companies.
On Friday, we finally saw a woman heading the Hong Kong Institute of Certified Public Accountants with Susanna Chiu, a director of Li & Fung Development (China), breaking the glass ceiling and winning the president's seat ahead of BDO managing partner Clement Chan Kam-wing.
This came a day after Hong Kong Exchanges and Clearing announced that from September next year all listed companies would have to ensure they have a more diverse board composition in terms of gender, age and background. Companies will have to explain if they fail to comply. The exchange issued a consultation paper on the issue in September and found most directors were middle-aged men and only 10 per cent were women. It showed that 40 per cent of listed companies had no women directors while 37 per cent had only one.
HKEx appears to have broken a record as this could be the shortest time the exchange has taken to determine a policy after a consultation period. It only ended the consultation last month - a fast track considering other policies such as quarterly reporting have been debated for 13 years with still no result.
Most of the 139 comments it received supported more diverse boards. Similar requirements can be found in Britain while others countries such as Norway, France, Italy and Malaysia go even further by legally requiring a certain percentage of women on boards.
White Collar also has received a lot of readers' comments on this issue, with most supporting HKEx's move. But one reader sent an academic report raising questions about the benefits of having more women on boards.
Professor David Matsa of Northwestern University's Kellogg School of Management and Professor Amalia Miller from the University of Virginia studied the impact of gender quotas for corporate board seats on corporate policy decisions.
They looked at Norway's 2006 decision to require at least 40 per cent of directors of listed companies to be women, comparing affected firms to other Scandinavian public and private companies that were unaffected by the rule.
The researchers found that firms affected by the quota undertook fewer workforce cuts than comparison firms, increasing relative labour costs and employment levels and reducing short-term profits.
This contrasts with other reports showing the benefits of women on boards.
A Credit Suisse report issued in August showed that after the 2008 financial crisis the shares of companies with women directors outperformed those without. The average return on equities of companies with at least one woman on the board over the past six years is 16 per cent, four percentage points higher than those without female directors.
Another study conducted by Catalyst in 2007 revealed that Fortune 500 companies with more women on their boards tended to be more profitable as they typically exhibited a higher degree of organisation, above-average operating margins and higher valuations.
With HKEx's new policy, we are likely to see more women directors next year. The next challenge is whether they can really deliver profits to the companies they serve.