There has been lots of media coverage on the need to have more women on company boards, but there has been little headway on it. Indeed, the Corston-Smith Asean-5 Gender Diversity Study shows that more than half of the companies listed on Bursa Malaysia and the Jakarta Stock Exchange still do not have a single woman director.

 

The study, which covers 3,054 companies in Corston-Smith's universe, was done over 13 years, that is, from 1998 to 2010. All in all, it covers the top 75% of all listed companies in five major ASEAN countries, namely Malaysia, Indonesia, Singapore, Thailand and the Philippines. Among them, only Singapore despite its small size has improved slightly, with just under 50% of all its companies surveyed without any female representation.

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The participation of women on boards is dismal and it shows that the region's women today are still hitting the glass ceiling despite more of them being better-educated. Statistics from the United Nations (UN) showed that the number of South-East Asian women who make it to universities ranges between 48% and 56%. Women in the Philippines, for example, have over 57% among their working women in decision-making positions, and its university enrolment rate is 54%.

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But while Malaysia has a slightly higher enrolment rate than that, that is, 56%, only 25% of working Malaysian women are decision-makers, according to the same UN figures.

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In all, the percentage of women directors within Corston-Smith's universe of companies is only 10% for the Philippines; 9.6% for Thailand; 8.2% for Indonesia; 7.1% for Malaysia and 6.2% for Singapore.

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When reviewing the impact of women's participation in public listed companies, we performed a regression analysis to examine the association between the percentage of women on boards with the performance of the company. The performance indicators that we reviewed were revenue, market capitalisation, earnings per share, net profit, return on equity (ROE) and return on assets.

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Interestingly, the regression analysis showed that all six variables are positively correlated with female representation on boards for both Malaysia and the Philippines. Most notably, for every 1 percentage point increase of women on boards resulted in an increase in ROE by +2.26% for Malaysia, and by +1.41% for the Philippines. All five countries showed a positive correlation between revenue and women on boards. That is, for every one per cent increase in the percentage of women on Boards will increase revenue between 0.12% (Thailand), 0.14% (Indonesia and the Philippines), and 0.16% (Malaysia and Singapore).

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We then went a step further and looked at those companies that had 3 or more women directors on their boards. Although the sample size is much smaller, (as there are very few companies in the region that have three or more women on their boards), the analysis showed better results. The regression models showed higher coefficients than our earlier survey of at least one woman on boards; this indicates that three or more women on board further improve the performance of the company.

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Similar results have been reported in companies beyond ASEAN. There is now clear financial proof that women directors contribute positively to effectiveness of a company's performance.

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Already, many such studies around the world have resulted in a wave of reforms to include women on boards. Resistance to the status quo of all-male boards is natural but, happily, even that is changing in ASEAN, albeit rather more slowly than in, say, the Scandinavian countries such as Denmark, Finland and Sweden.

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In Malaysia, the target of 30% women on corporate boards by 2016 was announced in July last year. Since the announcement, we have seen the formation of a women director's registry, as well as government funding for training of women directors. In Prime Minister Datuk Seri Najib Tun Razak's recent budget (on 28th September 2012), RM50mil has been allocated, among other things, to train 500 women directors.

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According to our universe, this is equivalent to doubling the number of existing directors in the top public listed companies. This new supply of directors is expected to address any demand issues that companies require to meet the new 30% target.

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All this is positive but the most progressive move we have seen is that various GLCs (government linked companies) are putting women from their senior management positions onto their unlisted company boards, to get these women “board ready” for their main public listed companies. This is a very proactive way of training individuals to be ready for their roles on the main company's board, as well as hopefully into the various C-suite (chief executive level) positions.

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What we would like to see, however, is more of a buy in from the chairmen and CEOs of the Malaysian public limited companies. They all seem to accept that women directors do add value to board meetings and to companies' performance, but that is as far as they will go for now.

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We also don't see many companies list out what skill sets they are looking for, and if they are actually looking for women directors with that specific skill set to join and add value to their companies' boards. We urge these companies to articulate clearly their criteria for women directors to the investing public.

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Some argue that the influx of women on corporate boards would displace older board members altogether. We do not agree that a member of the board should be retired only because he is more senior than the other members. We strongly believe that strong personalities and having someone with the “corporate memory” is extremely important and valuable for continuity. What we do suggest is that if people have been serving for a long time, they need to change their roles from being independent to non-independent.

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We maintain our view that this whole exercise of including women directors is about broadening your talent search for better board members and ultimately demanding better corporate performance. We would like to see more chairpersons and CEOs speak out and support gender diversity, as it is obvious that this is purely a business case that gets better results and is about being more competitive.