The issue of gender diversity in corporate boards has been attracting research interest in variou... more The issue of gender diversity in corporate boards has been attracting research interest in various countries because of the many socioeconomic contributions women directors are purported to confer to the firm, some of which involve improved board monitoring quality and a more ethical and democratic form of leadership. This rationale forms part of the “economic case” for women’s participation in boards, apart from the usual grounds of social or equality considerations. We examine this board-level gender diversity issue for the case of the firms traded in the Philippine Stock Exchange during the period 2003 to 2014. Using an unbalanced panel of 2,645 firm-years, we find that greater gender diversity in boards, which in the case of our sample firms also indicates the presence of more female directors in the board, does not significantly affect short-term firm performance as alternatively measured by ROA and ROE, but seems to drive down long-term firm value as measured by Tobin’s Q. Our results are robust with respect to board-level gender diversity measures and are based on estimates that take into account the effects of unobserved individual effects and potential endogeneity of gender diversity.
Our findings are consistent with the investor bias theory, which argues that investors collectively drive down the market value of firms with more gender-diverse boards because they have a perceptual bias against women as capable firm leaders and directors. Our results put to question the economic rationale of imposing any mandatory minimum gender quota on boards of, at least, Philippine publicly listed firms, similar to the practice in most European countries. We suggest that policy makers must be cautious in proposing quotas that seek to promote gender parity in boards of directors of publicly traded firms based on a claim that it will significantly improve firm performance and shareholder value. Instead, enforcing board-level gender quotas may have to be justified in terms of social equality, business reputation, and purely ethical grounds.
Women have been making headway when it comes to occupying corporate board and senior management p... more Women have been making headway when it comes to occupying corporate board and senior management positions in companies all over the world, particularly in the Philippines. Stylized facts released by international reports point to the surprising prevalence of women holding leadership positions among Philippine firms. Hence, this descriptive study bridges a gap in the Philippine corporate governance literature by using data on around 250 PSE-listed firms to examine gender diversity composition and trends among CEOs, boards, and top management teams in Philippine publicly traded firms on a five-year interval (i.e. 2003, 2008, 2013) and for the most recent year (i.e. 2014). Additionally, we provide information on the educational profile of CEOs of PSE-listed firms. Our study confirms the existence of a gender gap among governing and managing bodies of Philippine public firms, but observes a gradual improvement in the representation of women in key leadership positions. We also find that most CEOs of PSE-listed firms share a common educational background in terms of undergraduate and graduate degrees received and tertiary schools attended.
A common feature of the corporate sector of emerging markets like the Philippines is the prevalen... more A common feature of the corporate sector of emerging markets like the Philippines is the prevalence of family-controlled conglomerates. This paper explores the effects of corporate diversification on firm value, particularly among family-controlled firms. Using firm-level data on 113 corporations that are listed in the Philippine Stock Exchange, we employ a generalized least squares random effects model to determine the effects of diversification behavior on firm value. We find that family owners play a significant role in moderating total diversification performance – said diversification tends to go beyond the optimal level, which reduces firm value. By further decomposing total diversification into its unrelated and related forms, we also find that most conglomerates are inclined to diversify to unrelated industries. With such findings, we assert that significant caution must be placed upon the use of unrelated corporate diversification among family firms due to the negative effects brought about by family entrenchment upon firm value.
The baseline New Keynesian approach employs the traditional IS equation, a Phillips curve, and a ... more The baseline New Keynesian approach employs the traditional IS equation, a Phillips curve, and a monetary policy rule centered upon the interest rate. While used as a standard framework in recent years for the analysis of monetary policy, this model, however, eschews the significance of monetary shock pathways other than the interest rate. Thus, in line with the monetarist transmission theory, this study enriches the classical New Keynesian Dynamic Stochastic General Equilibrium (DSGE) specification by presenting a model that includes a money demand equation, which is posited to convey information about monetary transmission that the interest rate has failed to capture. Departing from the study of Hendrickson (2011), who simultaneously incorporated agency costs, labor frictions, and money demand on his nested New Keynesian model, this paper isolates the impact of a money mechanism alone and presents the implications of monetary shocks across significant economic variables over a specified time interval via simulation.
The application of the mean-variance approximation (MVA) has been strictly confined within the ex... more The application of the mean-variance approximation (MVA) has been strictly confined within the expected utility paradigm. Standard economic theory and mean-variance analysis, specifically, assume risk-aversion and expected utility maximization; however, literature has suggested a non-expected utility framework as an alternative investment rule. In particular, prospect theory has gained significant attention due to its S-shaped [risk-seeking] element that is at odds with mean-variance suppositions, yet is at par with contemporary investment behavior. Hence, using quarterly stock return data obtained from Philippine publicly listed firms, this paper justifies the empirically powerful performance of the mean-variance approximation to expected utility functions, and reports its incompatibility with the S-shaped utility function of prospect theory. Departing from the study of Choi (2006), this study also details the theoretical differences between expected and non-expected utility frameworks and generalizes the results via a simulation exercise.
The issue of gender diversity in corporate boards has been attracting research interest in variou... more The issue of gender diversity in corporate boards has been attracting research interest in various countries because of the many socioeconomic contributions women directors are purported to confer to the firm, some of which involve improved board monitoring quality and a more ethical and democratic form of leadership. This rationale forms part of the “economic case” for women’s participation in boards, apart from the usual grounds of social or equality considerations. We examine this board-level gender diversity issue for the case of the firms traded in the Philippine Stock Exchange during the period 2003 to 2014. Using an unbalanced panel of 2,645 firm-years, we find that greater gender diversity in boards, which in the case of our sample firms also indicates the presence of more female directors in the board, does not significantly affect short-term firm performance as alternatively measured by ROA and ROE, but seems to drive down long-term firm value as measured by Tobin’s Q. Our results are robust with respect to board-level gender diversity measures and are based on estimates that take into account the effects of unobserved individual effects and potential endogeneity of gender diversity.
Our findings are consistent with the investor bias theory, which argues that investors collectively drive down the market value of firms with more gender-diverse boards because they have a perceptual bias against women as capable firm leaders and directors. Our results put to question the economic rationale of imposing any mandatory minimum gender quota on boards of, at least, Philippine publicly listed firms, similar to the practice in most European countries. We suggest that policy makers must be cautious in proposing quotas that seek to promote gender parity in boards of directors of publicly traded firms based on a claim that it will significantly improve firm performance and shareholder value. Instead, enforcing board-level gender quotas may have to be justified in terms of social equality, business reputation, and purely ethical grounds.
Women have been making headway when it comes to occupying corporate board and senior management p... more Women have been making headway when it comes to occupying corporate board and senior management positions in companies all over the world, particularly in the Philippines. Stylized facts released by international reports point to the surprising prevalence of women holding leadership positions among Philippine firms. Hence, this descriptive study bridges a gap in the Philippine corporate governance literature by using data on around 250 PSE-listed firms to examine gender diversity composition and trends among CEOs, boards, and top management teams in Philippine publicly traded firms on a five-year interval (i.e. 2003, 2008, 2013) and for the most recent year (i.e. 2014). Additionally, we provide information on the educational profile of CEOs of PSE-listed firms. Our study confirms the existence of a gender gap among governing and managing bodies of Philippine public firms, but observes a gradual improvement in the representation of women in key leadership positions. We also find that most CEOs of PSE-listed firms share a common educational background in terms of undergraduate and graduate degrees received and tertiary schools attended.
A common feature of the corporate sector of emerging markets like the Philippines is the prevalen... more A common feature of the corporate sector of emerging markets like the Philippines is the prevalence of family-controlled conglomerates. This paper explores the effects of corporate diversification on firm value, particularly among family-controlled firms. Using firm-level data on 113 corporations that are listed in the Philippine Stock Exchange, we employ a generalized least squares random effects model to determine the effects of diversification behavior on firm value. We find that family owners play a significant role in moderating total diversification performance – said diversification tends to go beyond the optimal level, which reduces firm value. By further decomposing total diversification into its unrelated and related forms, we also find that most conglomerates are inclined to diversify to unrelated industries. With such findings, we assert that significant caution must be placed upon the use of unrelated corporate diversification among family firms due to the negative effects brought about by family entrenchment upon firm value.
The baseline New Keynesian approach employs the traditional IS equation, a Phillips curve, and a ... more The baseline New Keynesian approach employs the traditional IS equation, a Phillips curve, and a monetary policy rule centered upon the interest rate. While used as a standard framework in recent years for the analysis of monetary policy, this model, however, eschews the significance of monetary shock pathways other than the interest rate. Thus, in line with the monetarist transmission theory, this study enriches the classical New Keynesian Dynamic Stochastic General Equilibrium (DSGE) specification by presenting a model that includes a money demand equation, which is posited to convey information about monetary transmission that the interest rate has failed to capture. Departing from the study of Hendrickson (2011), who simultaneously incorporated agency costs, labor frictions, and money demand on his nested New Keynesian model, this paper isolates the impact of a money mechanism alone and presents the implications of monetary shocks across significant economic variables over a specified time interval via simulation.
The application of the mean-variance approximation (MVA) has been strictly confined within the ex... more The application of the mean-variance approximation (MVA) has been strictly confined within the expected utility paradigm. Standard economic theory and mean-variance analysis, specifically, assume risk-aversion and expected utility maximization; however, literature has suggested a non-expected utility framework as an alternative investment rule. In particular, prospect theory has gained significant attention due to its S-shaped [risk-seeking] element that is at odds with mean-variance suppositions, yet is at par with contemporary investment behavior. Hence, using quarterly stock return data obtained from Philippine publicly listed firms, this paper justifies the empirically powerful performance of the mean-variance approximation to expected utility functions, and reports its incompatibility with the S-shaped utility function of prospect theory. Departing from the study of Choi (2006), this study also details the theoretical differences between expected and non-expected utility frameworks and generalizes the results via a simulation exercise.
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Papers by Ailyn Shi
Our findings are consistent with the investor bias theory, which argues that investors collectively drive down the market value of firms with more gender-diverse boards because they have a perceptual bias against women as capable firm leaders and directors. Our results put to question the economic rationale of imposing any mandatory minimum gender quota on boards of, at least, Philippine publicly listed firms, similar to the practice in most European countries. We suggest that policy makers must be cautious in proposing quotas that seek to promote gender parity in boards of directors of publicly traded firms based on a claim that it will significantly improve firm performance and shareholder value. Instead, enforcing board-level gender quotas may have to be justified in terms of social equality, business reputation, and purely ethical grounds.
Our findings are consistent with the investor bias theory, which argues that investors collectively drive down the market value of firms with more gender-diverse boards because they have a perceptual bias against women as capable firm leaders and directors. Our results put to question the economic rationale of imposing any mandatory minimum gender quota on boards of, at least, Philippine publicly listed firms, similar to the practice in most European countries. We suggest that policy makers must be cautious in proposing quotas that seek to promote gender parity in boards of directors of publicly traded firms based on a claim that it will significantly improve firm performance and shareholder value. Instead, enforcing board-level gender quotas may have to be justified in terms of social equality, business reputation, and purely ethical grounds.