The relationship between board of director's nationality diversity and financial performance

Companies are moving to a more international structure; going into new markets and having an increased competition in all fronts. Therefore, the practices that lead companies to a more efficient and competitive position are praised. The management of the workforce comes as one of the main concerns of companies, aiming at performance enhancing and at creating better environments that both attract and maintain the professional talents. In an increasingly international environment, companies tend to look for the specialists and best professionals, regardless of their nationality. This new structure with several different nationalities working together poses new challenges for companies. Understanding if and how a more diverse has a relationship with financial performance is the starting point for better managing this new corporate structure.

Comparison and analysis of corporate social responsibility (CSR) reports of the top five companies ranked on the 2013 CSR RepTrak

In the 1970s, Corporate Social Responsibility (CSR) was discussed by Nobel laureate Milton Friedman in his article “The Social Responsibility of Business Is to Increase Its Profits.” (Friedman, 1970). His view on CSR was contemptuous as he referred to it as “hypocritical window-dressing” a reflection of the view of Corporate America on CSR back then. For a long time short-term maximization of shareholder value was the only maxim for top management across industries and companies. Over the last decade, CSR has become a more important and relevant factor of a company’s reputation, shifting the discussion from whether CSR is necessary to how best CSR commitments should be done (Smith, 2003). Inevitably, companies do have an environmental, social and economic impact, thereby imposing social costs on current and future generations. In 2013, 50 of the world biggest companies have been responsible for 73 percent of the total carbon dioxide (CO2) emission (Global 500 Climate Change Report 2013). Post et al. (2002) refer to these social costs as a company’s need to retain its “license to operate”. In the late 1990s, CSR reporting was nearly unknown, which drastically changed during the last decade. Allen White, co-founder of the Global Reporting Initiative (GRI), said that CSR reporting”… has evolved from the extraordinary to the exceptional to the expected” (Confino, 2013). In confirmation of this, virtually all of the world’s largest 250 companies report on CSR (93%) and reporting by now appears to be business standard (KPMG, 2013). CSR reports are a medium for transparency which may lead to an improved company reputation (Noked, 2013; Thorne et al, 2008; Wilburn and Wilburn, 2013). In addition, it may be used as part of an ongoing shareholder relations campaign, which may prevent shareholders from submitting Environmental and Social (E&S)1 proposals (Noked, 2013), based on an Ernst & Young report 1 The top five E&S proposal topic areas in 2013 were: 1. Political spending/ lobbying; 2. Environmental sustainability; 3. Corporate diversity/ EEO; 4.Labor/ human rights and 5. Animal testing/ animal welfare. Three groups of environmental sustainability proposal topics of sub-category number two (environmental sustainability) 6 2013, representing the largest category of shareholder proposals submitted. PricewaterhouseCoopers (PwC) even goes as far as to claim that CSR reports are “…becoming critical to a company’s credibility, transparency and endurance.” (PwC, 2013).

Connecting Diversity : Paradoxes of Multicultural Australia

Commissioned by SBS, and published in March 2006, Connecting Diversity: Paradoxes of Multicultural Australia is a follow-up study to SBS’s 2002 report, Living Diversity: Australia’s Multicultural Future. The attitudes of many younger Australians from culturally diverse backgrounds reveal paradoxes about Australian multiculturalism today. This report sheds light on their views, experiences and expectations and the role of media in their lives. Younger, culturally and linguistically diverse Australians are often the subject of mediafanned controversy about disaffection, ‘ethnic gangs’ and cultural isolation. While these controversies tend to be localised – Cronulla, Inala or Bankstown – Connecting Diversity tells a national and quite different story. This research builds upon the findings of the 2002 report, Living Diversity: Australia’s Multicultural Future, which challenged common assumptions about contemporary multicultural Australia. In an era of fragmenting media and assumed political apathy, Connecting Diversity further examines many of the findings of the earlier study, with a new focus on younger people, cultural identity and media use. Connecting Diversity reveals individual experiences and often contradictory ideas about media and diversity in Australia. Disjunctions appear to exist between an individual’s experience and their thoughts about Australia’s national identity. Multiculturalism is valued for broadening the appreciation of difference, yet this support can coexist with concerns about perceived segregation, usually ‘elsewhere’ in Australia. Younger people tend to be more comfortable with cultural difference than previous generations and cite their own diverse network of friends as one of the reasons for this. Even so, some describe experiences of racism that engender a feeling of exclusion from ‘mainstream’ society. In their everyday lives, social relationships are navigated through regular and familiar connections on the one hand, and experiences and expressions of disconnection on the other. Racism and tolerance may be expressed almost simultaneously. These disconnections are often managed through ‘practical tolerance',allowing them to negotiate these apparent contradictions. The connections can be based simultaneously on such things as work, family,religion, friendships or location. The result is a multilayered sense of personal belonging and community connection. A large number of respondents in these focus groups expressed frustration at the failings of media, especially news and current affairs coverage, yet spoke enthusiastically about the accessibility and range of media compared to what was available to previous generations. In their many forms, media remain a key ingredient of self-identification among younger Australians of culturally diverse backgrounds who are especially cynical about media and disillusioned by their perceived inability to influence issues that are important to them. These findings reveal that although they may be cynical about media messages, these younger Australians are looking for connection through media and are seeking ways to participate in meaningful ways. This raises questions about the possibilities for media to empower younger people to play a part in genuine cultural democracy. By capturing the attitudes of Australians of culturally diverse backgrounds under the age of 40, Connecting Diversity: Paradoxes of Multicultural Australia provides an insight into social trends and the generational and cultural changes that are now shaping Australia.

Statutory-backed continuous disclosure regime and corporate disclosure behaviour : does corporate governance matter?

Since 1 December 2002, the New Zealand Exchange’s (NZX) continuous disclosure listing rules have operated with statutory backing. To test the effectiveness of the new corporate disclosure regime, we compare the change in quantity of market announcements (overall, non-routine, non-procedural and external) released to the NZX before and after the introduction of statutory backing. We also extend our study in investigating whether the effectiveness of the new corporate disclosure regime is diminished or augmented by corporate governance mechanisms including board size, providing separate roles for CEO and Chairman, board independence, board gender diversity and audit committee independence. Our findings provide a qualified support for the effectiveness of the new corporate disclosure regime regarding the quantity of market disclosures. There is strong evidence that the effectiveness of the new corporate disclosure regime was augmented by providing separate roles for CEO and Chairman, board gender diversity and audit committee independence, and diminished by board size. In addition, there is significant evidence that share price queries do impact corporate disclosure behaviour and this impact is significantly influenced by corporate governance mechanisms. Our findings provide important implications for corporate regulators in their quest for...

Statutory-backed continuous disclosure regime and corporate disclosure behaviour : does corporate governance matter?

Since 1 December 2002, the New Zealand Exchange’s (NZX) continuous disclosure listing rules have operated with statutory backing. To test the effectiveness of the new corporate disclosure regime, we compare the change in quantity of market announcements (overall, non-routine, non-procedural and external) released to the NZX before and after the introduction of statutory backing. We also extend our study in investigating whether the effectiveness of the new corporate disclosure regime is diminished or augmented by corporate governance mechanisms including board size, providing separate roles for CEO and Chairman, board independence, board gender diversity and audit committee independence. Our findings provide a qualified support for the effectiveness of the new corporate disclosure regime regarding the quantity of market disclosures. There is strong evidence that the effectiveness of the new corporate disclosure regime was augmented by providing separate roles for CEO and Chairman, board gender diversity and audit committee independence, and diminished by board size. In addition, there is significant evidence that share price queries do impact corporate disclosure behaviour and this impact is significantly influenced by corporate governance mechanisms. Our findings provide important implications for corporate regulators in their quest for a superior disclosure regime.

Does board gender diversity have a financial impact? Evidence using stock portfolio performance.

There is growing regulatory pressure on firms worldwide to address the under-representation of women in senior positions. Regulators have taken a variety of approaches to the issue. We investigate a jurisdiction that has issued recommendations and disclosure requirements, rather than implementing quotas. Much of the rhetoric surrounding gender diversity centres on whether diversity has a financial impact. In this paper we take an aggregate (market-level) approach and compare the performance of portfolios of firms with gender diverse boards to those without. We also investigate whether having multiple women on the board is linked to performance, and if there is a within-industry effect. Overall, we do not find evidence of an association between diversity and performance. We find some weak evidence of a negative correlation between having multiple women on the board and performance, but that in some industries diversity is positively correlated with performance.

Who selects the 'right' directors? An examination of the association between board selection, gender diversity and outcomes

Using a sample of companies from the top 500 listed firms in Australia, we investigate whether the presence of a designated nomination committee and female representation on the nomination committee affect board gender diversity. We also examine whether gender diversity on the board affects firm risk and financial performance. We find that board gender diversity is significantly and positively associated with the presence of a designated nomination committee and that female representation on the nomination committee is a significant explanatory factor of increasing board gender diversity following the release of the 2010 Australian Securities Exchange Corporate Governance Council (ASXCGC) recommendations. Further, our results support the business case for board gender diversity as we find greater gender diversity moderates excessive firm risk which in turn improves firms’ financial performance. Our results are robust after correcting for selection bias and controlling for other board, firm and industry characteristics.

Demographic faultlines in boards : impact of diversity and board size

Negative board diversity-organizational outcomes research findings have highlighted the importance of studying board demographic faultlines. Based on research gaps, this study focuses on gender diversity, age diversity, board size and faultlines formation in corporate boards. It proposes a positive linear diversity-faultlines relationship based on self-categorization and social identity theories, interaction effects of gender diversity and age diversity on faultlines based on contingency theories, and a U-shaped board size-faultlines strength relationship. The hypotheses were tested in 288 large companies listed on the Australian Securities Exchange using archival data. The results provided partial support for the interaction effects relationships and support to the U-shaped board size-faultlines strength relationship. The findings indicate that boards with low levels of age diversity experience a negative linear relationship between gender diversity and faultlines such that higher representation of women leads to weaker faultlines. The results also suggest that small- and large-sized boards experience stronger faultlines strength than medium-sized board. These results inform practice and underline implications of board demographic diversity and board size.

Corporate board and corporate social responsibility assurance: Evidence from China

This paper investigates the association between board characteristics and the company’s corporate social responsibility (CSR) assurance decision in China. By examining 2054 firm-years of Chinese listed companies with CSR reports from 2008 to 2012, we find that firms with a large board size, more female directors, and separation of CEO and chairman positions are more likely to engage in CSR assurance. Gender diversity also influences the CSR assurance provider choice. However, board independence and overseas background of the CEO do not affect the CSR assurance decision. Inconsistent with our prediction, firms with foreign directors are less likely to engage in voluntary CSR assurance. In summary, this research provides in-depth insights into the determinants of Chinese firms’ voluntary CSR assurance.

Gender Diversity in the FTSE 100: The Business Case Claim Explored

This article examines the debate within corporate governance about the
appointment of female non-executive directors (NEDs). The first part
tracks the diversity story that corporate governance tells about itself from
the Cadbury Report (1992) to the Davies Report (2011). The second sets
out the evidence used to support the argument that female appointments
enhance profits and corporate profile. The third part presents the
authors' empirical analysis of FTSE 100 companies and female non-
executive board membership, and concludes that there is little evidence
that companies with female board membership display different charac-
teristics from those without. Industry sector emerges as a significant
factor in female appointments. The idea that women should be appointed
to boards to increase corporate profitability and profile is not strongly
supported by this analysis.A social justice argument based upon the right
of woman to equal economic participation opportunities provides a much
superior articulation of the need for boardroom diversity.

Responsible Leadership: Business Myth or Corporate Reality?

The financial crisis has highlighted some of the limitations of the global system. Enterprises previously thought to be too big to fail have learned the harsh realities of capitalism (Merill Lynch, Lehman Bros, Northern Rock), countries have been shaken considerably from the bankruptcy of Iceland to the near-collapse of the markets in Greece, Ireland and Italy. The current age of austerity has largely dominated supra-national and indeed global politics in the last few years. The extent of the crisis has illustrated that relationships between business, governments and society needs to be re-evaluated in light of shifts in the global market thereby recognizing that some countries have a more limited power of persuasion than some corporations.

Corporate real estate management in the retail sector: a study of the relationship between the management of the corporate real estate and corporate performance

Retail organisations have often been cited as being at the forefront of corporate real estate management. This research found that the retail sector can be characterised by diversity both in terms of the degree to which organisations are vertically integrated and in terms of the range of modes of retailing they engage in. This in turn led to highly diverse real estate portfolios. Given this diversity it may be surprising that the over riding strategy which the vast majority of sample firms adopted was focused on supporting the core retail activity. However the way in which they implement this strategy, again reflected the diversity in the sector. In terms of the future, the senior real estate managers were focusing on the medium term particularly looking at the way change would impact their functional strategy. This study provides a snap-shot of current practice and contributes to the debate however it also recognised that there is a need to answer the more fundamental questions.