Gender diversity indicator, corporate environmental and financial performance: evidence from Europe

Purpose – Big data and the use of technology in business communication and digital culture have become an important part of companies’ daily activities .Big data is massive and impressive but its value depends on the organizations’ ability to analyse and to use it (McGuire et al., 2012; Errity and Lucker, 2013). One of the most important benefit from the use of big data is to improve performance metrics and to provide high-returned applications of data and related analytics. By setting big data in the context of corporate reporting with a specific focus on a gender perspective the board and management can maximize the impact of this process on organization’s value creation process. This paper aims to examine the extent of gender diversity information within corporate reporting and to evaluate its impact on firm environmental and financial performance. In Europe recent regulatory changes through the approval of the DIRECTIVE 2014/95/UE (October, 22, 2014) OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2013/34/EU as regards disclosure of non-financial information and diversity information by certain large undertakings and groups and the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement and Directive 2013/34/EU as regards certain elements of the corporate governance statement (April, 9, 2014) also affected gender diversity items within requirements about non-financial disclosure and the improvement of corporate governance for creating value. In the international arena some organizations have enacted several frameworks and guidelines in order to provide operational guidance for reporting of non-financial information, in particular on social issues, such as gender diversity (Guiding Principles on Business and Human Rights, UN 2011; Guidelines for Multinational Enterprises, Organisation for Economic Co-operation and Development OECD, 2011; ISO 26000 Social responsibility, International Organization for Standardization ISO, 2010; Tripartite declaration of principles concerning multinational enterprises and social policy, International Labour Organization ILO, 2006; GRI Sustainability Reporting Guidelines; Global Reporting Initiatives, last version G4, 2013). Giving the dramatic increase of interest on these issues, the research objectives will be the following ones: OB1: recognition of existing frameworks in the area of gender diversity information both in terms of (mandatory and voluntary) reporting and in terms of best practices of corporate governance disclosure, with a specific focus on the European Union; OB2: analysis of corporate reports of a sample of the largest companies (in terms of market capitalization) listed on the major European stock markets referring to the period 2009-2011 and 2012-2014 (before and after the early adoption of innovative forms of corporate reporting, such as Strategic Report and Integrated Reporting); OB3: a comparison between the empirical findings of these two periods to determine whether the growing adoption of innovative forms of corporate reporting led to an improvement in terms of the extent of disclosure on gender diversity with a focus on the position and participation of women within the bodies of corporate control; OB4: to perform a regression analysis to assess the impact of gender diversity information and gender diversity involvement in corporate governance structure in terms of corporate environmental performance (CEP) and corporate financial performance (CFP). Design/methodology/approach – The methodology consists in the analysis of the issues on gender diversity included in ESG (Environmental, Social and Governance) scores extracted from Bloomberg database. Bloomberg offers a useful database to widen the analysis beyond accounting numbers or financial indicators and it allows professional investors the evaluation of a broad cross section of ESG indicators (Bloomberg LP, 2014), such as resource efficiency, emissions management, community relations, workforce development and board/committee structures. Specifically, the Bloomberg database provides information about several items included into Social Disclosure Score and Governance Disclosure Score, such as the percentage of women in workplace, the percentage of women in management, the number of women on board, the percentage of female executives, etc. We will perform a Gender Diversity Disclosure Index (GDDI) which will be used in some bivariate and multivariate statistical analyses, to investigate the following research question, i.e. whether and to what extent, GDDI affects the firm’s environmental and financial performance. Corporate Environmental Performance (CEP) will be evaluated by Environmental Disclosure Score, extracted from Bloomberg database and Corporate Financial Performance (CFP) will be measured both by accounting-based measurers (such as ROA, ROE, etc.) and market-based indicators (MTBV, EPS, etc.). The empirical research will focus on the analysis of corporate reports of a sample of the largest (in terms of market capitalization) listed companies on the mayor European stock markets and the process of data collection may be influenced from the availability of the ESG data. Originality/value – This research may contribute to the existing literature in regard to the studies focused on the challenges associated with the analysis of big data (George et al., 2014) also in the view of improving corporate governance practices (Tihaniy et al., 2015, to extent prior research on gender diversity disclosure within new forms of corporate reporting (Eccles and Krzus, 2010; Frias-Aceituno et al., 2013), on the field of role of women in the board of directors and senior managers (Nalikka, 2009; Terjesen et al., 2009; Colaco et al., 2011; Ntim et al., 2012;) and on their influence on firm’s financial performance (Chapple, Humphrey, 2014). Recently, there are interesting studies on the evaluation of gender diversity disclosure focused not only on its impact on financial performance (Francoeur et al., 2008; Carter et al. 2010; Holm and Scholer, 2011; Mahadeo et al., 2012; Nath et al. 2013; Low et al., 2015; Multakin et al., 2015; Isidro and Sobral, 2015) but also on corporate social and environmental performance. (Bear et al., 2010; Lu, 2012; Boulouta, 2013; Hafsi and Gokhan, 2013; Harjoto et al., 2015; Setò-Pamies, 2015; Post et al., 2015). In addition, this study may contribute to the field on corporate social responsibility because our expected findings may demonstrate a positive association between gender diversity information included in social and governance issues and firm’s environmental performance (Ciocirlan and Pettersson, 2012; Liao et al., 2015). Practical implications - The research could provide useful tips for policymakers on how to disclose non-financial information on gender diversity in corporate reporting thanks to innovative forms of corporate reporting. The expected findings may suggest a positive impact of Gender Diversity Disclosure on firm’s environmental and financial performance. Limitations of the research carried out: 1) size of the sample and 2) analysis focused only on the European context.