A Review on the Relationship between A Ratio of Corporate Women Officers and Firm Performance

One of the most significant governance issues currently facing the corporate managers, directors, and shareholders is the gender composition of the board of directors. In the same context, the relationship between a ratio of corporate women officers and the firm’s performance also has taken on a high public attention as a result of reports in the popular press, shareholder proposals, and policy statements from major institutional investors in U.S. and European countries. Specifically, in recent years, boardroom gender diversity issue has become a key policy focus in many countries such as U.S., Norway, Spain, and French etc. In particular, Norway has enacted a gender regulation in 2003 requiring corporations to have 40 percent women directors by 2008. Spain passed a guideline in 2007 to encourage companies to increase the share of women directors to 40 percent by 2015. Also, French National Assembly proposed a law on January 20, 2010, in which imposed 20 percent gender quotas on boards of listed French companies within 3 years of the adoption of the law, and 40 percent quotas after 6 years. Belgium, Italy and the Netherlands also have prepared similar regulations for enactment. Additionally, on September 30, 2018, California in U.S. became the first U.S. state to introduce a mandatory board gender quota for all companies headquartered in California. Before this enactment, in the U.S., support for diversity has grown in principle, but progress has lagged in practice, and most of controversy has focused on whether and why diversity matters. From this perspectives, this article seeks to evaluate the case for gender diversity on corporate boards of directors in order to develop corporate governance system in Korea. As a conclusion, despite the similarity of economic environment and governance regime to these developed countries, Korea has not yet implemented regulation which mandate female board seats in listed company. Thus, I recommend that policymakers and legislators in Korea should seriously consider the adoption of women allocation system on boards in the future.