Impact Of Gender Diversity On Company’s Financial Performance Within Largest UK Organisations

Impact of gender diversity on company’s financial performance within largest UK organisations.

In addition to that research made by (Zhu, et al., 2014) focused on evidencing that board of directors are more likely to choose and take onto board only similar thinking individuals despite on their gender or ethnicity. Therefore females will have to be more similar into board occupants along shared dimensions then other demographically different director’s e.g. young directors will find it easier to get into in-group. By using recategorization theory and research authors came to conclusion that despite individual’s gender or ethnical diversity existing directors would give priority to those who are more similar to them along other shared demographical dimensions or when new director is recognised amongst existent directors from prior events. The research also propose that such new directors tend to serve on board for a longer time period. Another point made by research was that although gender diversity had increased over the last years it does not affect company’s financial performance as there are barriers set by existent directors. For example new directors with different educational background would receive indirect pressure from existent members of the board and would be excluded from particular information.

Sample will consist of 5 biggest companies listed on London Stock Exchange website listed under FTSE 100 section. The reason of choosing companies from FTSE 100 section is that FTSE 100 listing top 100 biggest UK companies where first company on the list holds the biggest capital. FTSE 100 companies are fluctuating in different sectors. Depending on direction that FTSE 100 index moving it affects not only investors but also entire UK population and country’s economy. Hence corporate governance and gender and ethnical diversity must be well controlled in order to introduce companies with safety measures and different level of intelligence (McCann & Sally, 2011).

Secondary data will be used in order to research raised question as primary information is time consuming and requires monetary investment. The question has two objectives therefore methodology for each objective will be discussed separately.

Based on issue of low number of female directors on board and assumptions that gender diversity could improve company’s financial performance two hypothesis were concluded. It is discussed below.

H1: Gender diversity is improved in largest UK companies over the last decade.

As there are no variables research will be broken into smaller parts. London stock exchange website will be engaged in order to enter list of FTSE 100 companies and select 5 biggest companies listed under mentioned classification. Furthermore annual statements of all 5 companies will be approached. Corporate governance section and Davies report of 2014 (Davies report is directly relevant to females on board and corporate governance) will be studied in order to find out what changes was implicated to improve gender diversity. Time series data will be involved as research will look back for 10 years period. It will support research of historical trends and changes in gender diversity within time scale. Finally findings will be provided on development of board diversity within largest UK companies’ and further recommendations will be delivered.