CONC L U S I ON

The 2009 census shows that women occupy a small minority of the board and top management positions in California’s
400 largest corporations. There is variation in the representation of women on the boards and in top management teams
across firms, and this variation can be attributed partly to differences in the primary industries, headquarters locations
and sizes of firms. Firms in the high-tech industries and located in Silicon Valley tend to include fewer women on the
board and in top management. The largest firms tend to have more women directors and managers. These results are
consistent with the findings from previous years.

There is little variation, though, in the representation of women in leadership positions in California’s 400 largest
corporations over time. For the past three years, the percentage of women on the boards of California’s largest firms has
hovered at about slightly less than 10%. The proportion of women in the top management teams of California’s largest
firms has fluctuated around slightly less than 12%. Furthermore, this year’s findings showed little variation in the
representation of women on the board and in top management within firms over time. Approximately 80% of the 297
firms included in this and last year’s census had the same number of women directors in 2008 and 2009. Approximately
85% of the firms included in this and last year’s census had the same number of women executives. Although 36 firms
had more women on their boards this year than last year, 24 firms had fewer women on their boards. Additionally, while
20 firms had more women in their top management teams this year than last year, 26 had fewer. This stability was
reflected in the correlation between the representation of women in 2008 and 2009. The correlation between the
numbers of women directors in the two years was .90 (where a correlation of 1.0 represents a perfect association). The
correlation between the numbers of women executives across the two years was .85.

Remaining Questions
The data reported in this and previous years’ censuses indicate women occupy a small minority of the board and top
management positions in California’s largest firms. They do not, though, help us understand why this is the case. In all
likelihood, it is not because very few women enter the managerial ranks. Women garnered more than 20% of the
business and management master’s degrees as early as 1980, and their share of such degrees has increased steadily
since then, reaching 40% in recent years (Business School Data Trends and 2009 List of Accredited Schools, AACSB
International). Are women managers “eligible” to be promoted into top management and placed on the board of large
firms advanced at a lower rate than men? That is, are women screened out of the competition for the board and top
management at the highest levels of the organization? If not, are women added to the pool of managers eligible to be
promoted into top management and placed on the board at a lower rate than men? That is, are women screened out of
the competition for advancement to the board and top management at lower levels in the organization?

If women are screened out of the competition for the board and top management, either early or late in their careers,
what mechanisms constitute such screening? Is there garden-variety bias against women simply based on gender? Or
are there more subtle forms of bias? For example, are women provided fewer opportunities to tackle difficult assignments
and thus demonstrate their capabilities? If so, is this because women are perceived to be unqualified for such assign-
ments? If this is true, is it because women occupy less central positions in social networks where reputations for
competence are built? There is a large amount of research on the factors that determine the advancement of women at
lower levels of organizations, both private and public. But there is surprisingly little research on the factors that might
impact advancement to the highest levels of business. Clearly, there is much we do not know about the factors that might
explain our results.

Also important, these data do not tell us about the consequences of the small representation of women on the boards and
in the top management teams of California’s largest firms. We conclude our report with a brief consideration of this topic
and some preliminary evidence of our own.

2009 UC Davis Census 24

Are Firms Led by Women Greener?
Several studies have examined the relationship between the inclusion of women in top management and the board and
corporate financial performance. The results of these studies suggest that firms that have women top managers and
directors exhibit better financial performance than firms that do not. Yet, it is not clear why firms that have women
leaders might exhibit higher performance than those that lack women leaders. Studies of individual investors, which
show that women are less susceptible to overconfidence bias and thus less likely to pursue risky stock trading strategies,
suggest one possible reason. Firms run by women might be less likely to pursue high-risk and low-return corporate
strategies. Future research should examine this possibility.

Both academicians and practitioners, however, increasingly recognize that firm performance has a social dimension as
well as a financial one. Firms vary in the extent to which their behavior is legal, ethical and socially responsible.
Researchers have begun to examine the factors that regulate corporate social performance. We think firms that include
women among their top managers and directors may exhibit superior social performance compared to those run
exclusively by men. Academicians who study ethical decision making have conducted experiments indicating that
women are more likely than men to favor ethical and socially responsible courses of action.

For this reason, we think that researchers should also examine the possible impact of women’s participation in top
management and on the board on the one hand and corporate social performance on the other. We have used this
year’s census data to conduct a very preliminary study along these lines. Our findings focus on one dimension of
corporate social performance, namely, the extent to which firms pursue environmentally sustainable practices. A recent
survey of business technology purchasers by Hansa|GCR, a marketing research and advisory firm (Green
TECHpulse ’08 www.hansagcr.com), found that women are more likely than men to favor ecologically sustainable busi-
ness practices. If this reflects a general tendency, then firms run by women should be run in a more ecologically
sustainable fashion.

To evaluate this hypothesis, we drew on a report prepared by KLD Research & Analytics, Inc. and Newsweek
Magazine (Green Rankings: The 2009 List http://greenrankings.newsweek.com), which ranked the largest 500 U.S.
firms on the basis of the extent to which they pursue environmentally friendly policies. The highest ranked firm, Hewlett-
Packard, was assigned the rank of 1. The lowest ranked firm, Peabody Energy, was assigned the rank of 500. Sixty-two
of California’s largest 400 firms in 2009 were included in KLD’s sample of the largest 500 U.S. firms. We grouped these
62 firms into four categories that differed in the extent to which they incorporated women on their boards and in their
top management teams: 1) firms with no women executives or directors, 2) firms with at least one woman
director but no women executives, 3) firms with at least one woman executive but no women directors, and 4) firms with
at least one woman director and at least one woman executive. Then, we conducted two analyses that examined the
statistical relationship between the extent to which those firms incorporated women on their boards and top
management teams and their KLD ranking.

In the first analysis, we simply tabulated the average KLD rank for the firms in the four women leadership categories.
The results of this analysis indicate that the incorporation of women in top management and the board was associated
with the pursuit of ecologically sustainable policies. Firms that had no women directors or executives had the poorest
environmental performance (average rank = 399). Firms that had both women managers and directors had the best
environmental performance (average rank = 186). Firms that had at least one women director (but no women
executives) and firms that had at least one women executive (but no women directors) had environmental records in
between these two extremes (241 and 208, respectively). These differences seem substantively significant, as the firms
that had no women managers and directors had environmental performance scores that were on average more than
200 points lower than firms that had both women managers and directors. But it is not clear whether or not those
differences are statistically significant and whether or not they are due to other factors that must be controlled.

25 2009 UC Davis Census

Thus, we also conducted a second analysis, in which we estimated a linear regression model that defined a firm’s KLD
rank as the dependent variable and included measures of a firm’s incorporation of women on the board and in top
management as independent variables. We also included indicators of a firm’s primary industry and a measure of its
market capitalization as control variables. The results of this analysis, depicted in the table below, indicate that firms that
include at least one woman director (but no women executives), at least one women executive (but no women directors),
and both women directors and executives all have stronger ecological performance (lower KLD rankings) than firms that
have no women directors or executives (the baseline/omitted category). Further, the results of this analysis indicate that
the effects of incorporating women in top management and on the board were statistically significant, even when taking
into account the impact of the industry and size controls (note: large market capitalization firms also exhibit better
environmental performance).

These results are preliminary. We used a relatively small sample of firms. Also, we have a relatively small number of
control variables. But, taken together with our other census findings, they suggest that not only do California’s largest
firms admit fewer women into their boards and top management teams but their corporate social performance suffers as
a result as well.

Determinants of KLD Green Ranking

Variable Regression Coefficient

At Least One Woman Director -172.581*
At Least One Woman Executive -247.394 **
Both Women Directors and Executives -217.343 **
Market Capitalization -.001 *
Pharmaceuticals 75.380
Industrial Goods -97.881
Retail -32.807
Financial Services -7.678
Banks & Insurance 45.214
Media 83.261
Health Care 200.815 t
Oil & Gas 308.377 t
Utilities 92.912
Consumer Products 51.091
General Industrial -34.594
Transportation 168.369
Constant 404.294
R2 .391
Adjusted R2 .155
Number of Observations 62

* Signifies statistical significance at the .05 level

** Signifies statistical significance at the .01 level (one-tailed test)
t Signifies statistical significance at the .05 level (two-tailed test)

2009 UC Davis Census 26