Gender vs. Power Balance: An Empirical Study on Women's Role on the Board of Directors in Norwegian PLCs

Abstract

In 2006, Norway implemented a gender quota law - a law that requires Norwegian Public Limited Companies (PLCs) to have a minimum representation of 40% of both genders on their corporate boards. It is evident that the law has been effective in establishing gender balance in the boardroom of Norwegian PLCs, having achieved an increase in the proportion of female directors from 7% in 2002 to 41% in 2016. Despite the global trend, and the use of policies, to address the lack of women on corporate boards, less attention has been drawn to what positions these female directors are appointed to, once they reach the boardroom. While increasing female representation on boards may be a step in the right direction towards gender equality, several studies are suggesting that very few of these female directors have been promoted to a role that will give them influence beyond their seat at the table. The thesis therefore investigates the distribution of power on corporate boards, with a particular emphasis on the positions held by female directors once they reach the top.

In this empirical study, we use data from Norwegian non-financial PLCs to investigate whether female directors are less likely than their male counterparts to be appointed to the most influential board positions. Moreover, we identify the most influential roles as the chairperson of the board, and being a member of the board’s committees. In addition to women being slightly underrepresented in the remuneration and nomination committees, our empirical results suggest that being a female director is associated with a lower likelihood of serving as the chairperson of the board, relative to male directors, after controlling for gender differences in human capital. Although our analysis do not explain why a gender bias may be present, we use previous research to discuss potential explanations, with a particular focus on social factors that could influence female directors’ appointments to influential roles. Moreover, female directors are found to be associated with closer monitoring and less compliant behaviour due to gender differences in cognitive frames. In turn, this may alter women’s likelihood of receiving the most influential positions within the board due to the self-interests of powerful individuals who may influence the director nomination process. While we find no significant relationship between gender and the likelihood of directors’ appointment to the committees, we contribute to the discussion of gender differences on corporate boards, and the understanding of whether women are sufficiently qualified and appointed to positions of influence, rather than purely considered as “token-women” on the Board of Directors.