Global Corporate Governance- Research Essay

Examine The Development and Practices of Gender Diversity in The Boardrooms of Large (e.g., ASX100 or ASX 200) and Medium-To-Small Publicly Listed Companies In Australia. Author’s Name The Institutional Affiliation Course Number and Name Instructor Name Assignment Due Date 1 Introduction Over the past few decades, gender diversity in boardrooms has garnered heavy attention, particularly in the context of publicly traded companies. This essay delves into the evolution and implementation of gender diversity in boardrooms of medium to small publicly traded companies and significant enterprises listed on the ASX100 and ASX200 in Australia. It also reflects these organizations’ difficulties in balancing gender diversity and development. The paper uses a theoretical lens to denote the overall outcome and suggest future growth. 2 Gender Diversity in the Boardrooms of Large and Medium-to-small Publicly Listed Companies in Australia (ASX100 or ASX 200) What makes gender diversity so important in the boardroom? Adam and Ferreira (2009) stressed the significance of gender diversity in boardrooms as it can deliberately affect governance and performance. According to the authors, women are more likely to engage in oversight than men. Thus, including women in the boardroom is significant for the overall governance outcome. Correspondingly, Carter, Simkin, and Simpson (2003) highlighted a positive correlation between board diversity and firm value. They find that a diverse board can bring varied perspectives, which may augment decision-making. Subsequently, women’s inclusion in boardrooms is not just a matter of equity but also directly related to strategic business decisions. This makes gender diversity so important in the boardroom. 1 Gender Diversity and Boardrooms of Large-Listed Australian Companies Larger companies in Australia are intensifying efforts to increase gender diversity at the governance level. According to Kang et al. (2009), larger firms have more diverse boards than smaller firms. The authors listed strict scrutiny and immense pressure from the stakeholders as the primary forces behind diverse governance in larger firms. Moreover, the Australian Stock Exchange (ASX) also significantly promoted gender diversity through its Corporate Governance Council. ASX promotes vital accountability and transparency in advocating for gender diversity at the governance level. Altogether, the larger firms publicly traded have more diversity in the boardroom. 2 Gender Diversity and Boardrooms Medium-to-small Publicly Listed Australian Companies Hu and Tan (2012) state that medium-to-small publicly listed companies lack resources and external pressure that fosters gender diversity in the boardroom. Additionally, these firms are closely knit, perpetuating existing gender based on traditional board appointment networks. Therefore, they lag in achieving a gender balance at the governance level. Australian Institute of Company Directors (AICD) illustrated that 42% of the board appointed in 200 listed companies were women (Amenta et al., 2010). This indicates a substantial increase from 8% in 2009 to 23.6% in 2016, with an estimated rate of increase up to 30% by 2018. Organizations like Medicare Private, where women comprise over 70% of the board, have surpassed this goal. Thus, the current state of gender diversity in Australia is deliberately increasing. 3 A Theoretical Framework For The Importance Of Gender Diversity in Boardrooms The focal point of institution theory is the environmental influence on any organization’s behavior and practices. This emphasizes how industry standards, regulatory requirements, and societal pressure drive companies to induce gender diversity at the governance level. Similarly, Australia is increasing gender diversity on the board to meet societal expectations and regulatory standards (Kang et al., 2007). Therefore, it is fitting that theoretical frameworks like institution theory deliver a framework for adopting change, including gender diversity. 3 Issues Large and Medium-to-small Publicly Listed Companies in Australia Face in Balancing Gender Diversity in the Boardroom (ASX100 or ASX 200) 4 Balancing Gender Diversity Issues and Boardrooms of Large-Listed Australian Companies Although larger firms have more diverse boards, they also encounter several issues in balancing them. According to Jin et al. (2023), several issues can hinder the application of gender diversity in the boardroom. Subsequently, Brammer et al. (2009) entitled the ‘pipeline problem’ indicated fewer women on the board, limiting the pool of potential female board members. Companies with diverse boards yield better financial outcomes than those without diversity (Erhardt et al., 2003). Despite all the known benefits, balancing gender diversity is a problem for various organizations. According to Jin et al. (2023), entrenched biases and slow turnover of board positions are primary reasons that imbalance gender diversity at the governance level. For example, Telstra Corporation Limited has historically encountered pipeline issues balancing gender diversity in the boardroom (Telstra et al., 2023). Similarly, the BHP group struggled to reach its gender diversity goal due to male dominance (BHP, 2024). Cultural and structural barriers significantly hinder women’s participation on the board. Kang et al. (2007) debated inducing concerted efforts to change an organization’s culture and structure. An organization’s change in culture and structure is the only legitimate response to cultural barriers. These barriers manifest male candidates being leveraged over similarly qualified female candidates. Changes in organizational culture can increase the room for women to implement policies in the boardroom. Rio Tinto, the mining giant, struggled to achieve gender diversity in the boardroom (Rio Tinto, 2024). Westfarmers still grapple with diversity challenges in achieving a balanced board (Westfarmers, 2022). 5 Balancing Gender Diversity Issues and Boardrooms of Medium-to-small Publicly Listed Australian Companies Leadership programs are often tailored to male candidates, and women are not encouraged to participate in leadership development programs. This is an issue as a development program can play a vital role in determining an outcome that benefits both the organization and the employee (Kang et al., 2007). However, a lack of support from the authorities may limit the productivity of such outcomes. Modern women are qualified with abilities similar to men in the corporate world (Hu et al., 2012; Ben‐Amar et al., 2013). Besides, women tend to focus on governance relatively higher than men. Both of these points are enough to encourage women employees to seek leadership development via mentorship and sponsorship. The organization...