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Incentive Schemes and Female Leadership in Financial Firms

Lantz, B., Bredehorst-Carlsson, P. & Johansson, J. (2013). “Incentive Schemes and Female Leadership in Financial Firms”, Corporate Board: Role, Duties and Composition, 9, 40-49.

25 Pages Posted: 28 May 2012 Last revised: 9 Aug 2013

Björn Lantz

University College of Borås (UCB)

Petra Bredehorst-Carlsson

Independent

Johan Johansson

Independent

Date Written: May 28, 2012

Abstract

Purpose: To explore how performance in Swedish financial companies is affected by the presence of a female chief executive officer (CEO), the presence of an incentive scheme, and the proportion of female board members.

Design/methodology/approach: Our sample consists of data from the last 10 years of all the 43 companies within GICS 40 listed at the Swedish stock exchange OMX Stockholm. We used multiple regressions to explore the association between the explanatory and firm performance variables.

Findings: The results indicate that a female CEO is associated with a lower return on equity (ROE) and a lower Tobin’s Q, but we find no significant association between the proportion of female board members and firm performance. An incentive scheme is generally associated with a lower return on assets (ROA) and a higher Tobin’s Q. In particular, a share-based incentive scheme is associated with a lower ROA, a lower ROE, and a higher Tobin’s Q.

Originality/value: To the authors’ knowledge, this is the first paper to analyse governance in financial firms with respect to female leadership as well as to incentive schemes. We conclude that governance structures in financial firms need to balance accounting-based and market-based performance. A large focus on share prices, especially at a certain time, may create short-term effects that need not necessarily be optimal in the long run for shareholders.

Keywords: Company performance, Incentive schemes, Women directors

JEL Classification: G3

Suggested Citation

Lantz, Björn and Bredehorst-Carlsson, Petra and Johansson, Johan, Incentive Schemes and Female Leadership in Financial Firms (May 28, 2012). Lantz, B., Bredehorst-Carlsson, P. & Johansson, J. (2013). “Incentive Schemes and Female Leadership in Financial Firms”, Corporate Board: Role, Duties and Composition, 9, 40-49.. Available at SSRN: https://ssrn.com/abstract=2069137 or http://dx.doi.org/10.2139/ssrn.2069137

Björn Lantz (Contact Author)

University College of Borås (UCB) ( email )

Allegatan 1
Borås, 50190
Sweden

Petra Bredehorst-Carlsson

Independent

No Address Available

Johan Johansson

Independent

No Address Available

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