Gender diversity on the boards of directors in Latin America

The "glass ceiling" effect describes the limitation faced by women in rising to senior corporate positions. In Latin America, only 1 in 25 board directors are women. There are no regulations as in other countries to promote gender diversity in corporations. Research by Dr Poletti-Hughes identified that gender diversity has a positive impact on board effectiveness in Latin American companies. This research has been influencing relevant stakeholders (i.e. gender equity groups, regulators and governmental organizations) towards achieving policy/legislative change in Corporate Governance Codes (the main vehicle that regulates corporate governance practices) to include the recommendation that boards should be gender diverse.

Background

Since 2005, research at the University of Liverpool has examined the relevance of culture and traditions in corporate practices. In particular, corporations overcome the value-decreasing risks associated with low investors' protection at a country level by improving corporate governance practices, including the composition of the board of directors.

Research

Research by Dr Poletti-Hughes considers the impact of country culture and traditions on the behaviour of Mexican firms. This research highlights that family firms and non-family firms diverge in their corporate objectives because family firms perceive patrimony as a means of safeguarding resources for heirs. The main finding suggests that family firms tolerate higher levels of risk than non-family concerns, consequently achieving higher corporate value. However, their risk preference is shaped based on non-financial reasons which distinguish the relevance of the regional setting. 

Focussing on Latin America, Dr Poletti-Hughes considers the significance of the culture and traditions to study whether gender diverse boards of directors are more effective in achieving corporate objectives, suggesting that the inclusion of women on the board goes beyond ethical concerns being also relevant from a business perspective (i.e. risk-taking), concluding that boards are more effective with the inclusion of female directors. 

Further research emphasizes the benefits of gender diverse boards towards financing decisions in Latin American companies. The composition of boards of directors is directly concerned to their effectiveness but more importantly different kinds of boards are required in different situations to optimise financing decisions (e.g. family firms in Latin America).

Impact 

Dr Poletti-Hughes's research is influencing a cross-institutional dialogue on changing corporate culture and attitudes around gender equitable norms. The focus of her engagement is to impact policy on female representation on corporate boards for a more inclusive approach to entrepreneurship and governance. Dr Poletti-Hughes's research has been highly commended by the IMEF (Mexican Institute of Financial Executives) which includes CEOs, company directors and other corporate executives; and she is working with the Committee of Best Corporate Practices at the Mexican Business Council (CCE) to contribute to the development of the supporting documentation to the new recommended practice of including women on boards in publicly listed companies. Additionally, ongoing work with the Association of Women in Management in Latin America and the Caribbean is seeking to influence Corporate Governance Codes, with the aim of revising regulations with respect to achieving gender diverse boards. Dr Poletti-Hughes is also contributing to work with women rights champions in politics and government to advance gender diversity on boards.

Ongoing Research 

In addition to the ongoing work mentioned above, Dr Poletti-Hughes is studying the influence of the quality of the board of directors (i.e. experience and expertise) on shaping the performance of female directors.