SINGAPORE - The percentage of board seats held by women in Singapore-listed companies under Credit Suisse's coverage universe went up to 9.9 per cent last year, in line with global trends, the bank reported on Monday.
The strongest increases worldwide were driven by quotas and targets in Europe, said its report, which analysed the 3,400 companies covered by Credit Suisse analysts worldwide.
In Asia, improvements were registered in diversity because of a low starting base, as well as the phenomenon of apparently increased diversity on the back of the same group of women holding more board seats.
The percentage of women in the boards of Singapore's largest companies in 2015 was the highest since data became available in 2010; it was a 1.5 percentage point improvement from 2014's 8.4 per cent.
Singapore's 9.9 percentage in 2015 was above the average of 8.9 per cent in developed Asia, although that regional mean included Japan and Korea - which have the least diverse boards in the world.
However, against its closest neighbours, Singapore was a laggard. Women held 13.9 per cent of board seats in Malaysia, and 12.7 per cent in Thailand.
The Monetary Authority of Singapore (MAS) on Monday suggested that the time may have come to review Singapore's corporate governance code; among the issues that could be included in a review was that of board diversity, MAS deputy managing director for financial supervision Ong Chong Tee said in a speech.
Credit Suisse noted that quotas and targets in Europe have helped to push board diversity there to world-leading levels; almost a quarter of board seats in Europe are held by women.
Asia has also improved in this respect, but there are important caveats. Credit Suisse said:
"This comes from a low base making strong headline figures more easily achieved, and even with this scale of improvement, female representation in Asia is still less than 10 per cent.
"Overboarding" also continues to be a concern, the bank said, referring to the practice of turning to other boards' existing female directors and simply awarding them appointments on additional boards.
"This has helped companies achieve quotas and targets numerically, but has not necessarily met the broader purpose of benefiting women and companies generally," Credit Suisse said.
"We have also seen several examples of companies cutting the number of directors on their board in order to achieve quota levels, rather than recruit additional female directors. This obviously does nothing to promote women into very senior positions."
In terms of industry, consumer staples and telecommunications led the way; materials and energy remained at the back.
The study continued to show that companies with at least a woman on the board tended to clock better corporate performance. Such companies outperformed those with all-male boards by 3.5 percentage points in 2015 on a compounded annual basis, an improvement from the 3.3 percentage points outperformance in the year before.
Companies where women comprised at least 15 per cent of senior management delivered 15.3 per cent returns on equity (ROE), 2.3 percentage points more than the 13.0 per cent by companies where women made up less than 10 per cent of senior management.
When the chief executive is female, ROE was 15.2 per cent, more than the 12.8 per cent return by companies with male CEOs.
Credit Suisse said: "We find that the market is willing to pay a 19 per cent premium price-to-book multiple for companies with a female CEO. Also, these companies show ROEs 19 per cent higher on average and a 9 per cent higher dividend payout. The talents of the CEO incumbent are far easier to assess and appreciate, and therefore price. Not causality, but solid correlation."
This article was first published on September 27, 2016.
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