Women directors help firms manage risks better: IIMB study

Published: 07th June 2013 08:18 AM  |   Last Updated: 07th June 2013 08:18 AM   |  A+A-

Even as late as 2012, only 5.2 per cent women have held a post on the board of directors in various companies and the numbers have not significantly improved since 2009, suggesting that there is a need to understand this phenomenon.

These insights form part of a study conducted by Vasanthi Srinivasan and Rejie George from the Indian Institute of Management, Bangalore titled ‘Building the Women Directorship Pipeline in India: An Exploratory Study’, which was presented during a half-day conference on Corporate Governance organised jointly with the National Stock Exchange on Thursday.

The study indicates that women directors feel their presence influenced better understanding of a customer segment, ability to raise questions on sensitive matters and help the executive team manage risks better.

The sample of the study included 11 female directors, four male directors, nine independent directors (including one former CEO, a politician, a former bureaucrat with domain expertise in FMCG, banking, finance, etc) and six executive directors (including one family director).

“We considered the experience of at least 35 directorships of various companies as a major sample criterion,” Vasanthi said.

“We also found that the attendance of male members increased during board meetings and there was a drop in aggression of a male member when there was a woman director on board,” Prof George said, and added: “There was a consensus that it didn’t matter to women whether there was another woman on board. However, only one of them, a political appointee, said it did matter.”

The study also finds that the identification of women directors is largely ‘a non-structured idiosyncratic process’.

The researchers said the new Companies Bill of 2012, which proposes a soft quota with one woman on boards of select companies, requires a commitment from firms to fill positions and a three- to five-year strategy is required to groom the identified women candidates to board-level positions.

Other presentations on the day included research papers on ‘Sustainability Reporting in Indian Corporates’ by P D Jose, an ‘Analysis of Related Party Transactions in India’ by Padmini Srinivasan and ‘Executive Compensation in India’ by N Balasubramanian (IIMB), Sameer Barua (IIMA) and D Karthik (IIMA).

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