gender diversity (presence of females) in board of directors and its impact on corporate performance...

8/13/2019 Gender Diversity (Presence Of Females) In Board Of Directors And Its Impact On Corporate Performance In Pakistan

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Gender Diversity (Presence Of Females) In Board OfDirectors And Its Impact On Corporate Performance In

Pakistan

S u b m i t t e d t o :

D r f a r a z

GROUP:

Ayesha JamilAfridi

Danish Mehmood

Sohaib Ahmad Barsal

NimraKhurshid

Shahzeb


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Contents

Introduction ............................................................................................................................................. 2

First women bank .................................................................................................................................... 4

Literature Review .................................................................................................................................... 4

Study Objectives ..................................................................................................................................... 5

Theoretical Framework ........................................................................................................................... 7

Business applications .............................................................................................................................. 9

Policy applications .................................................................................................................................. 9

Bibilography....................................................................................................................................9


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This research proposal aims at finding a correlation between the presence of females in the

corporate sector and its overall impact on the performance of a corporate entity in Pakistan.

Introduction The Board of Directors in a corporate entity is the ultimate decision making body inappointments against top management positions, determination of perks and privileges of theexecutives and strategy formulation. Hence, the constitution of the BoDs has always beenconsidered to be the most important factor in determining the fate of an organization in thecompetitive environment. They spell out the targets, set the direction and pace and offerincentives to achieve those targets. It is just natural that the researchers have shown keeninterest in finding relationship between the nature of the Boards in terms of gender diversityand their impact on deliverables. They have touched upon various aspects which could

potentially affect productivity of the organization; ranging from age and education to culturalvalues and managerial skills.

There are three main aspects of the issue of gender diversity in BODs:

i) The number/proportion of women vs men;ii) Legal frame work governing the issue; andiii) Performance

Historically, the women have nowhere in the world have been given a fair chance and equalopportunities to prove their worth. Even in the most developed societies, they facediscriminations and restrictions. Surveying the studies done on the composition of corporateworkforce of the world ,we found only 11% women against 20% men working in Africa,12% women against 25% men working in Asia(excluding china), 13% women against 27%men working in the Latin America and Caribbean and 15% women against 36% men inEuropean countries. In the past, all females in the workplace were assigned part-time or lowresponsibility jobs because it was understood that their first priority was taking care of theirfamilies. Unmarried women were expected to leave the job as soon as they married andmarried women were likely to leave the job as soon as they became pregnant. Women withchildren were expected to care more about the children than about work. Moreover, there wasa common belief that women were not as capable as men, either physically or mentally oremotionally. This restrictive regime gets more rigid and discouraging as they aspire to moveto higher positions. With the increased access to education, the representation of women hasin dramatically increased at entry level. The governments, too, are encouraging women

participation either through legislative measures or ensuring and enabling unbiasedenvironment in work places. The focus has within the past few years shifted from their

participation to performance. It is in this background that gender diversity has attracted

attention of the research scholars as a subject to study the performance of BODs havingmixed representation. by gender diversity in workplace we mean by women being employed


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on the same level alongside men and are given the equal amount of privileges andopportunities that there male co workers enjoy.

The recent amendments in the Constitution of Pakistan have made it compulsory toensure women representation and participation in all spheres of life. Reservation of womenquota from Union Councils to Parliament, civil services and opening of ,till now, restrictedareas like armed forces to the young and energetic ladies have helped women break all socialand cultural barriers to realize their true potential. They are no more confined within the fourwalls of their houses. They are seen marching in parade grounds, flying fighter jets, running

banks, looking after law and order and debating political issues in the parliament. Theincreased visibility of women in public life hasraised many questions as well. And one ofthese questions, in fact, the most dominant one, is their contribution in real terms, to theoverall economic and social development of Pakistan.

The West and the US have long ago passed this stage. A number of studies are availablesuggesting linkages of proportion of women on BOD to corporate performance. In some casestudies, this proportion is linked to success rate while the others find no direct impact.thosestudies in which there they have studied a direct impact include a study done in Europe wherethey highlighted some of the features that they determined helped improved corporate

performance of an organization

It signifies a balanced company More effort is put in decision making and across board Better mix of leadership skills

Access to wider pool of talent Improved corporate governance Better reflection of consumer decision maker

In Pakistan, the women have in the past few years pursued career opportunities ratheraggressively. pakistan, the female work employment is very low and the few women whomake it to the corporate sector ,usually do not make it to higher management level positionsor are not employed in areas concerning major decision making like the board of directors Itis, therefore, intriguing to study this phenomenon in the context of Pakistan. Since, no studiesin this regard are available in our context; we will be constrained to benefit from relatedresearch studies elsewhere in the world.

We have, after a thorough discussion amongst the group members, chosen tostudy BODs of commercial banks with special reference to First Women Bank inPakistan. The reasons to select Banking sector for our research are obviously their roleand importance in economy, availability of required information from multiple sources,data reliability and success stories associated specially with the First Women Bank in ashort span of time. We take this organization as a symbol and representation of women

competency and their ability to contribute positively to the corporate performance of anorganization. We want to highlight that if other organizations in Pakistan start to


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employ women on their boards like FWBL does, their organizational efficiency andcorporate performance will soar.

First women bank

First women bank limited (fwbl) is a unique financial instituition,it is a scheduled commercial bank and a development financial institution for the economic empowerment of women,itsa

It was set up in 1989 by the first women prime minister of the Islamic world Benazir Bhutto(shaheed),who wanted a bank that would cater to the financial and banking needs of women.Its headquarters are located in Karachi The main branch is located in Karachi, however thereare several branches located in all major cities of Pakistan including; Lahore, Islamabad, Peshawar, Rawalpindi, Abbotabad, Bahawalpur, Faisalabad, Gujranwala, Gujrat, Hyderabad, Jhelum, Khairpur, Larkana, Mardan, Multan, Quetta, Rahim Yar Khan, Sargodha, Sialkot, Shikarpur, Sukkur and WahCantt.

Statement of Problem

The research proposal aims at studying Pakistani womens role in decision making andinstitution building with special reference to banking and financial sector in the light ofstatistical data and general perception of their co-workers, clientele at large and employers.

Literature Review As yet, no research has led to establishment of a scientific linkage between the number of

women on BODs and their impact on performance. Different studies have led to startlinglycontradictory studies. Frank Dobbin and Diwook Jung of Harvard Universitys Department ofSociology have pointed out that instead of BODs affecting stock markets; it is entirely otherway round. Actually, it is the institutional investors community that i nfluences compositionof BODs in terms of gender diversity.

Adams and Ferreira in 2009, after studying 1,939 US companies, arrived at an entirelydifferent conclusion in their study. According to them, mere gender diversity does not makeany difference. It is rather diversified skills, educational and cultural background thatfacilitates quicker and better decision making.

ProbalDutta and Sdipta Bose in 2007, have tried to collect evidence from Bangladeshexperience of gender diversity and its impact on performance of commercial banks. Theyfound a paradoxical relationship between these two and also cautioned about using theirresearch without further refinement.

Credit Suisse Research Institutein a latest study (August 2012) identified seven key reasonsfor correlating greater gender diversity with stronger corporate performance. These includegreater effort, risk reduction, better mix of leadership skills and improved corporategovernance.
http://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Islamabadhttp://en.wikipedia.org/wiki/Peshawarhttp://en.wikipedia.org/wiki/Rawalpindihttp://en.wikipedia.org/wiki/Abbotabadhttp://en.wikipedia.org/wiki/Bahawalpurhttp://en.wikipedia.org/wiki/Faisalabadhttp://en.wikipedia.org/wiki/Gujranwalahttp://en.wikipedia.org/wiki/Gujrathttp://en.wikipedia.org/wiki/Hyderabad,_Pakistanhttp://en.wikipedia.org/wiki/Jhelum_(City)http://en.wikipedia.org/wiki/Khairpur,_Pakistanhttp://en.wikipedia.org/wiki/Larkanahttp://en.wikipedia.org/wiki/Mardanhttp://en.wikipedia.org/wiki/Multanhttp://en.wikipedia.org/wiki/Quettahttp://en.wikipedia.org/wiki/Rahim_Yar_Khanhttp://en.wikipedia.org/wiki/Sargodhahttp://en.wikipedia.org/wiki/Sialkothttp://en.wikipedia.org/wiki/Shikarpur,_Pakistanhttp://en.wikipedia.org/wiki/Sukkurhttp://en.wikipedia.org/wiki/Wah_Cantthttp://en.wikipedia.org/wiki/Wah_Cantthttp://en.wikipedia.org/wiki/Sukkurhttp://en.wikipedia.org/wiki/Shikarpur,_Pakistanhttp://en.wikipedia.org/wiki/Sialkothttp://en.wikipedia.org/wiki/Sargodhahttp://en.wikipedia.org/wiki/Rahim_Yar_Khanhttp://en.wikipedia.org/wiki/Quettahttp://en.wikipedia.org/wiki/Multanhttp://en.wikipedia.org/wiki/Mardanhttp://en.wikipedia.org/wiki/Larkanahttp://en.wikipedia.org/wiki/Khairpur,_Pakistanhttp://en.wikipedia.org/wiki/Jhelum_(City)http://en.wikipedia.org/wiki/Hyderabad,_Pakistanhttp://en.wikipedia.org/wiki/Gujrathttp://en.wikipedia.org/wiki/Gujranwalahttp://en.wikipedia.org/wiki/Faisalabadhttp://en.wikipedia.org/wiki/Bahawalpurhttp://en.wikipedia.org/wiki/Abbotabadhttp://en.wikipedia.org/wiki/Rawalpindihttp://en.wikipedia.org/wiki/Peshawarhttp://en.wikipedia.org/wiki/Islamabadhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Karachi


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Another related study by John WachudiEkadah and JosphatMboya has been conducted toassess the Board Gender Diversity on the Performance of Commercial Banks in Kenya. Theyhave pointed out that BoDs of commercial Banks in Kenya are heavily male-dominated.However, interestingly, the study found that Board diversity had no effect on performance of

banks in Kenya.

Study Objectives The main and foremost objective of this research is to highlight role of women in

national development Creation of awareness amongst the general masses regarding importance of

empowerment of women in the society and corporate performance To establish the positive relationship between women on boards and organizational

productivity The secondary objective is to inspire the young ladies to carve out a place of their

own choice in this world.


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Research Methodology

Research methodology has 2 parts

1.Research Design

This explains where we intend to carry out our research. We would carry out our research inthe first women bank limited through the country in all the cities where a branch of FWBL islocated.

2.Data Collection

This highlights how specifically the data is been collected.we will gather data byquestionnaires and also we would conduct interviews . we would analyze and interpret thedata using SPSS

Briefy.We will use multiple sources to conduct our study. Some of the suggested ways as tohow we plan to go about are:

i) Visits to Banks Headquarters;ii) Visits to selected branches in urban and semi-urban/ rural areasiii) Visit to the Regulator i.e. State Bank of Pakistan;iv) Visit to the Ministry of Finance;v) Acquisition of related material and data from field visits;vi) Interviews with CEOs, top executives and policy makers;vii) Formulation of questionnaire for clients;viii) Formulation of questionnaire for employees;ix) Opinion Survey from general public;x) Tabulation and Analysis of data.


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Theoretical Framework The variables that are relevant to our research are gender and corporate performance. Thecorporate performance can be split into different measures such as Profit, Return on Assets,Return on Investment, Share price, the companys cash flows etc.

Here in our research, gender is the independent variable and all the other measures ofcorporate performance fall in the category of dependent variables.

We shall test the independence of the two variables using the chi-square test.

Ho: The two variables gender and ROA are independent.

H1: The two variables gender and ROA are not independent. (They are associated).

Similarly, we shall test for other variables as well. Other than the chi-square test, we shallalso be applying regression and correlation on our data using SPSS.

Also, we shall use e- views and incorporate female as dummy variable and see the effect.

We are expecting association between the two variables. We are expecting that our H 1 will be accepted.

And in the case of correlation we are expecting positive correlation. And also we are hopingthat the inclusion of female as dummy variable will bring significant changes in the model.


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Time frame

The study may take 5 dedicated months to carry out the following activities:

ACTIVITY May 2013 June2013 July2013 August

2013

September

2013Month number 1 2 3 4 5Visit to banksheadquartersVisits to selected

branches in urbanand semi-urban/rural areas

Visit to theRegulator i.e. StateBank of PakistanVisit to the Ministryof FinanceAcquisition ofrelated material anddata from field visitsInterviews withCEOs, topexecutives and

policy makersFormulation ofquestionnaire forclientsFormulation ofquestionnaire foremployeesOpinion Survey fromgeneral public;

Tabulation andAnalysis of data

using SPSSresults

Budget

Since ourresearch proposal requires local visits the cities within Pakistan; hence it would becompleted with nominal cost and within our budget range which would be around 30-40thousand


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Business applications Our research aims to highlight the underrepresentation of women in top level positions andhow their representation can lead to better decision making and better corporate performanceif we succeed in proving the positive relationship between women empowerment and

increased corporate performance it would be a huge turning point for business organizationsin Pakistan as they would be made aware of the importance of having female a mind on their board of directors and how it increase their organizational productivity .it would also give arise to women employment and representation in management level positions

Policy applications Since Our research will highlight the importance of women and board and how it increasesorganizational productivity we would hope that the Pakistani government takes notice of itand encourage more and more women to participate in the workforce and also reduce the

factors in organizations that hinders the working womens efforts to reach at the top.


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bibliography

Research Institute Thought leadership from Credit Suisse Research and the worlds foremostexperts. (August 2012). Gender diversity and corporate performance.

Ekadah, J W and Mboya,J. EFFECT OF BOARD GENDER DIVERSITY ON THEPERFORMANCE OF COMMERCIAL BANKS IN KENYA. European Scientific Journal.Vol.8.No.7. (April edition).

Adams, R B (2004) and Ferreira, D (2004). Gender Diversity in the Boardroom. europeancorporate governance institute.

Dutta, P (2007) and Bose, S (2007). Gender Diversity in the Boardroom and FinancialPerformance of Commercial Banks: Evidence from Bangladesh. Munich Personal RePEcArchive.

http://en.wikipedia.org/wiki/First_Women_Bank
http://en.wikipedia.org/wiki/First_Women_Bankhttp://en.wikipedia.org/wiki/First_Women_Bankhttp://en.wikipedia.org/wiki/First_Women_Bank


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