Closing The Corporate Gender Gap

 EVANSTON, IL -- Despite continued gains in low to mid-level management positions, women still struggle to break through the corporate glass ceiling for coveted top management positions. Today, women account for nearly half of the nation's overall workforce but hold only 6 percent of corporate CEO and high-level executive roles. New research from the Kellogg School of Management at Northwestern University finds that one key to career advancement for women may lie in the gender make-up of a company's corporate board.

The research examines female representation on corporate boards and its subsequent effect on the gender composition of the company's top management positions. According to the study, a higher representation of women on a company's board of directors directly increases the female share of and access to higher positions within the company.

"Unfortunately, there are still institutional gender barriers in today's workplace that prevent women from holding high-level executive positions," said Professor David Matsa, assistant professor of finance at the Kellogg School. "Our research uncovers the impact of 'women helping women' at the highest level of company leadership. Women who hold board positions have a unique opportunity to propel their female colleagues into executive roles, so in effect when women's share of board seats increases, their share of top level positions also increases."

Matsa, with co-author Amalia Miller of the University of Virginia and the RAND Corporation, a non-profit research organization, analyzed data about corporate board members and top executives for a large panel of publicly traded companies from 1997 to 2009. During the sample period, women's share of board seats increased by 7.2 percentage points (a 94 percent increase from initial levels) and their share of top executive positions increased by 2.8 percentage points (an 86 percent increase). Remarkably, the share of companies with female CEOs increased more than sixfold to 5.7 percent of companies.

"In addition, we also found that as a board's gender composition evolved and increased its number of female seats, over time the likelihood that these boards would select female managers also increased," said Matsa. "However, this gender shift can take multiple years. Our research shows that while the female share of board seats may increase the desire to hire other female executives, there is a lag time for women to achieve these roles probably because the positions are currently occupied by qualified candidates."

Interestingly, the researchers noted that the reverse situation is not true: having female executives in top roles did not impact the gender make up of corporate boards over time. This implies that female board membership typically precedes shifts in executive positions held by women, but not vice versa.

"Overall, the results show that women are each other's best advocates, and by helping one another they have the potential to make remarkable gains in today's workforce," said Matsa. "When women are seated at the highest levels in corporate America, they are in a unique position to serve as mentors to those below them and to create more opportunities for female leadership and management roles."

The study, "Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership," will be published in the May 2011issue of The American Economic Review: Papers and Proceedings.