Financial Performance is Better in Companies With More Women: SECP

The Securities and Exchange Commission of Pakistan (SECP) has analyzed that there is a clear correlation between gender diversity on boards and the financial performance of listed companies, as the financial performance of companies having women on the board and other positions is much better in Pakistan.

According to a recent report by SECP, titled “Women on Board,” the data from Pakistan show a definite positive impact of the SECP regulations on board gender diversity in the listed companies. This impact is seen primarily across three variables, i.e., the number of women on board, the number of independent women directors, and as chairpersons.

Women directors have increased by 3 percent since the regulations were introduced. The proportion rose from 8.8 percent in 2017 to almost 12 percent in 2019. Considering that the percentage remained constant between 2015 and 2017, the growth could be attributed to the introduction of the 2017 Regulations.


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The SECP regulations also caused a proportionate increase in the number of female independent directors. In 2015 and 2017, the number of such directors was almost constant, at 17 and 16, respectively. However, it rose to 51 in 2019. At the same time, the number of Chairwomen increased from 24 to 33, registering an increase of 37.5 percent.

However, it is disconcerting to note the downward trend in the number of senior women occupying C-suite positions, and this has direct implications for the lack of a healthy corporate pipeline of future business leaders. The proportion of listed companies with women directors also shows an increase from 31 percent in 2017 to 58 percent in 2019. Between 2015 and 2017, the increase was only 3 percent.

Listed companies with at least one woman director has increased from 84 in 2017 to 163 in 2019.

However, companies with two women directors remained constant at about 40 from 2015 to 2019 and those with three or more at 27-30. These figures show that while regulations have driven an increase in women on boards, most companies chose to do the bare minimum only and comply with the Regulations rather than appoint women over and above the number required by law.

Further, it is notable that a sizeable 42 percent of the listed companies remain without any woman director in 2019. This is primarily due to their election cycle not having completed three years since the introduction of the regulation. It is expected that the next time this data is compiled, the number will be closer to 100 percent.

Sectors such as finance, textile, manufacturing, pharmaceutical and chemical, engineering and automobile, and energy have shown the highest increase in the number of women directors. The textile and manufacturing sectors have the highest number of woman directors, 75 and 74, respectively. Concerning the proportion of female chairpersons, the textile sector shows the highest increase, from 8 in 2017 to 13 in 2019, while the energy sector also doubled its number of women chairs.


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Other sectors either remained constant or changed slightly, and the same can be said of the number of female c-suites across all sectors, SECP data revealed.

Perhaps the most important finding from the data collected from Pakistan is that there is a clear correlation between gender diversity on boards and the financial performance of listed companies. Listed companies were segregated into those with and without women on their boards and the average return on assets (ROA) and return on equity (ROE) of both groups was calculated.

The results show that the financial performance of companies with women is higher in both 2017 and 2019. The SECP then looked at these returns on a sector basis. The percentage by which these values are higher varies from sector to sector. Some of the sectors showing the highest increase in the number of women on boards show a corresponding growth in ROA and ROE.

These include the finance, textile, and engineering, and automobile sectors. Once again, the increase is more pronounced in some sectors than others. It is also clear that the only two sectors where the number of women directors remained constant, show the highest decrease in financial performance from 2017 to 2019, i.e., healthcare and miscellaneous. The only sector not displaying the same trend is manufacturing, which could be a result of other extraneous factors, including the general slowdown in the economy during this period.

The SECP recommended that once effective measures are in place, regulation should look towards increasing the mandatory quota of women on boards, for as noted above, greater gender parity in the boardrooms is needed to leverage the benefits of gender diversity.


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Measures included in the diversity policies that are conducive to the retention of female talent include the provision of daycare centers, better maternity leaves, robust anti-harassment, and speak-up policies with diverse committees overseeing the complaints. These policies go a long way in addressing concerns about harassment at the workplace.

There is enough anecdotal evidence to suggest that the presence of women on boards also focuses the board’s attention on these issues.

SECP added that adequate networking opportunities need to be given to senior women by nominating them on various industry forums. The current representation on the majority of such industry forums is male-dominated, denying women an equal opportunity to network and be recognized outside the limited company domain.

It is encouraging that several corporate awards now focus on diversity within companies. There is a need to increase the weightage given to these diversity initiatives within the overall ratings for such awards.

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