Do gender-diverse boards affect corporate governance and board performance?

There has been much focus on creating more diverse corporate boardrooms. The UK government-sponsored Davies reports of 2011-15 outlined the business case and set targets to help drive this agenda. By-and-large corporations embraced the targets with the number of women sitting on FTSE 100 boards increasing from 152 to 305 from 2011 to 2018. However, research elsewhere reveals mixed outcomes when linking board diversity to financial performance. Considering the wider lens of "value creation", link greater board diversity and better managed governance processes, citing women's greater monitoring, differing perspectives and willingness to ask difficult questions. Feedback from FTSE Chairs in board evaluations is that diversity creates better quality debate as there are different perspectives and this, in turn, leads to better outcomes for the business as a whole. However, with some notable exceptions, most of the research looking at composition and performance fails to consider the processes between those 'input' and 'output' relationships. With more than 20 years of descriptive women on boards data in the USA, Canada and UK, a more nuanced understanding is sought of whether and how gender-diverse boards affect corporate governance and board performance. The proposed PhD will address these issues over three related projects which tie together investor motivations to board makeup and the impact a Chair has on the effective running of a diverse board.

1. What diversity factors do Institutional Investors pay attention to when constructing their voting strategies?
Diversity reporting is part of the Code of Governance in the UK but is often not fully adhered to (FRC, 2018). Survey data collected from institutional investors will determine whether their methods match their motivations for their engagement on corporate diversity issues.

2. Do diverse boards behave differently to homogenous boards in terms of accountability, oversight and risk?
The Financial Conduct Authority (FCA) collects data on regulated firms via regulatory returns, authorisation requests and supervisory activities, which when analysed should allow an understanding of the interplay between conduct risk and board composition. They also hold data on Complaints, Suspicious Activity Reports, and Enforcement Cases. UoEBS already has access to BoardEx proprietary data and the FCA is also suggesting the use of FCA / PRA data on prudential risk; potential FCA data on compensation structures; and Mifid II data containing relatively detailed information on the trading desks carrying out a trade, including individual characteristics. Exeter Centre for Leadership (ExCL) and the FCA are in the process of signing Non-Disclosure Agreements to collaborate in access to their data sets.

3. What is the role of the Chair in ensuring the effectiveness of a diverse board?
Through interviews with board Chairs and potentially board evaluators, this work will add to our knowledge of board dynamics - the behavioural and socio-cognitive processes explaining how and why diversity affects performance in elite groups. Access to such individuals is often a major barrier to this type of research (Leblanc & Schwartz, 2007). With my network and that of ExCL, this is a strength of this proposal. With such limited field research in the area of corporate board Chairs, it will provide insight directly from people working on and with boards, at a very practical level, to better understand the dynamics and influences of business and diversity outcomes.