The 40% Club: Company Performance Quality and Gender Equality

Brikena Berisha
Faculty of Economy, AAB College, Prishtinë
DOI: https://doi.org/10.31410/eraz.2018.877

4th International Conference – ERAZ 2018 – KNOWLEDGE BASED SUSTAINABLE ECONOMIC DEVELOPMENT, Sofia- Bulgaria, June 7, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; Faculty of Business Studies, Mediterranean University – Podgorica, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance – Belgrade, Serbia, ISBN 978-86-80194-12-7

Abstract

With the new laws across Europe being made, mandatory quotas appointing the number of women participating, are being introduced. As a result, more women are and more women are being expected to participate on boards of directors, contributing this way to gender equality in the labour market.
This year is the tenth anniversary since Norway approved the law on the mandatory participation of women on boards of directors, to be as high as 40%. A considerable number of other countries followed with the same action, with some of them, also approving financial penalties for companies not respecting the quota. In 2013, the European Union also approved the law that 5000 selected private European companies should have 40% representation of each gender from 2020, while state-owned companies should start the same from 2018. The Parliament of Kosovo, in March 2018 approved the law for women participation on board of directors, obliging commercial companies to have a board of directors made of 40% women at least. After two years, this will be followed by the 50% percentage and sanctions for those that obey. The scenario was the one foreseen, and besides, in the absence of sound debate or qualitative concerns.
Overall, the quota main aim certainly has been to increase women participation as board’s members. And for these 10 years, throughout Europe, the number of women on boards actually has doubled. In Kosovo, as predicted, the scenario was followed by the absence of qualitative concerns and debate. But what about Europe, are there controversy over this action? Yes, there is much controversy over the relationship between setting quota and quality growth.
Going on an in-depth analysis, what is the effect of introducing quota on business performance? Based on literature review, this article analyses the effect of quotas on private companies in a cross-country context. Reviewing different practices, the study finds that changes on decision making and financial performance have been made during this period, but could not be attributed directly to the quota effect and are not directly related to the board composition.