While most directors generally are only part of a single board, some directors are part of multiple boards (Grønmo & Løyning, 2003; Huse et al., 2009). We refer to these directors as prominent directors. By being prominent, directors gain access to other directors and knowledge. Grønmo & Løyning (2003) found in their qualitative study of Norwegian directors that prominent ones are more influential and their views carry more weight than others. Moreover, through interviews, they found that the directors believed that being prominent is a valuable way of acquiring knowledge and experience.
One of the main goals for the Norwegian Government (2008) in introducing the gender representation law was to create a more equal setting between the sexes. In particular, it focused on distributing power in the board room more equally as "reaching a balanced participation is a question of democracy". Given that prominent directors are influential, it is interesting to study the evolution of prominence as this might contradict the goal of equality. In particular, if the maximum number of directorships that a single director holds has greatly increased, there has been a concentration of influence. More generally, if directors have become less similar in terms of prominence, this could signal that a select group of directors have gained a high level of prominence and created an elite group (Opsahl et al., 2008). Although it is beneficial to be prominent, if this benefit is only enjoyed by a select few directors, this might decrease equality. In order to achieve a more equal setting with a more even distribution of power, the maximum number of directorships that a single individual holds has not increased substantially, and therefore similarity among directors' prominence has increased. To explore this issue, we put forth the following hypothesis:
Hypothesis 2a: The maximum number of directorships that a single individual holds has not increased.
Women and multiple directorships
The gender representation law has been a center of attention for the media. In particular, the media has highlighted the fact that certain women directors have attained a large number of directorships. These directors have been labeled the "Golden Skirts" by newspapers like the Financial Times. , If this is a wide-spread issue, it is a relatively new phenomenon as Grønmo & Løyning (2003) found that the proportion of women dropped from 14.3 percent to 8.7 percent when only considering prominent directors in their dataset from 2000. The existence of a disproportionally large group of prominent women would be a contradiction of the Norwegian Government's intention of creating a more equal setting with an even distribution of power. To investigate the existence of "Golden Skirts", we put forth the following hypothesis:
Hypothesis 2b: Women and men are equally represented when only considering prominent directors.
A reduction of prominent directors would be aligned with the goal of the Norwegian Government to create a more equal setting. Yet, we found that the number of prominent directors has increased substantially during our observation period. More specifically, the number of prominent directors rose from 91 to 224. Moreover, the maximum number of directorships that a single director holds has increased dramatically as shown in the Figure below. In fact, the maximum number has doubled. More specifically, in May 2002, one woman and two men were among the most prominent directors by being members of four public limited companies' boards each, whereas in August 2009, one woman held eight directorships. To further investigate the emergence of highly prominent directors, we calculated standard deviation to gauge the dispersion of directorships. Low dispersion would reflect equality as people have a similar value, whereas high dispersion would signal inequality. Dispersion has increased for most of the observation period. However, during the implementation period of the law, the rate of increase soared. As this finding corroborates the increase in the maximum number of directorships held by a single director, we do not find that the law has increased equality among directors when focusing on prominence. Therefore, we reject hypothesis 2a. On the contrary, we find that influence has been concentrated on a few individual directors, which further contradicts the equality intention of the gender representation law.
As the proportion of women on boards has risen, we also investigated whether this was the case among the prominent directors. At the beginning of our observation period, only 7 of the 91 prominent directors were women. The gender balance among prominent directors has changed considerably through the period, and at the end of the period, 107 women and 117 men were prominent directors. Thus, the increase in prominent directors is mainly driven by an increase in the number of women, which has led to a substantial change in the gender balance among prominent directors. In order to test hypothesis 2b, we calculated the proportion of prominent directors who were women and the proportion of all directors who were women every month of our observation period. The relationship between these two proportions has changed in the last decade. In May 2002, the proportion of prominent women was approximately the same as the proportion of women (7.1% of all directors were women, whereas 7.7% of prominent directors were women). However, in August 2009, the percentage of women among prominent directors was 47.8%, whereas the percentage was only 39.1% among all directors. Interestingly, by applying more restrictive definitions of prominence, the proportion of directors who are women generally increases. More specifically, if only considering directors with at least three directorships, 61.4% of them are women. When considering directors with seven or more directorships, all of them are women. As there is a distinct association between prominence and sex, hypothesis 2b is rejected. A disproportionally large group of prominent women ("The Golden Skirts") has emerged.The evolution of the maximum number and standard deviation of directorships held by a single director each month.
Grønmo, S., & Løyning, T. (2003). Sosiale nettverk og økonomisk makt. Bergen, Norway: Fagbokforlaget.
Huse, M., Nielsen, S. T., & Hagen, I. M. (2009). Women and employee elected board members, and their contributions to board control tasks. Journal of Business Ethics, 89(4), 581-597.
Opsahl, T., Colizza, V., Panzarasa, P., & Ramasco, J. J. (2008). Prominence and control: the weighted rich-club effect. Physical Review Letters, 101(168702).
The Norwegian Government (2008). Representation of both sexes on company boards. http://www.regjeringen.no/en/dep/bld/Topics/Equality/rules-on-gender-representation-on-compan.html (accessed on August 5, 2009).
To test our hypotheses, we collected a list of all the 384 public limited companies in Norway (Allmennaksjeselskap or ASA) that were available online through the Norwegian Business Register’s website on August 5, 2009. We chose these companies as they are the ones bound by the gender representation law. Based on the list of companies, we collected all official announcements made to the register that were online. These announcements contain changes to the composition of the boards of directors since November 1, 1999. Since all companies did not change their boards immediately after the Register started publishing the announcements online, our observation period only starts in May 2002, and extends to August 2009. The choice of starting the observation period in May 2002 is based on a trade-off between the inclusion of companies and the length of the observation window. Of the 384 companies, 196 were incorporated after November 1, 1999. These companies are included in our dataset on the first of the following month of their incorporation. The additional 188 companies (incorporated before November 1999) changed their boards at various times. We chose to start the observation period in May 2002 as 90 percent of these companies had at least changed their board once by that time. Thus, information on their board compositions was published online. The remaining 10 percent (19 companies) are included in the dataset as soon as they changed their boards’ compositions. Companies that filed for bankruptcy are removed from the sample in the month following such an announcement.
From the board compositions, we extracted a list with the names of all directors. From this list, we excluded employee representatives as the legislation does not affect them in the same way. Since mistakes could have occurred while entering the data and people may change their name, this list was manually cleaned by studying the compositions over time and comparing changes. For example, Alexandra Bech Gjørv was a director of Schibsted ASA from 2001 until 2007. However, in 2001 and 2002, her name was listed as simply Alexandra Bech. Without the manual cleaning, she would have been included as two separate people in the dataset.
To determine the sex of the directors in our dataset, we collected lists of all male and all female first names belonging to more than 200 people in Norway from Statistics Norway. We cross-referenced these two lists with the first names of the directors. However, some first names were not in either of the lists, and some first names were included in both lists. In an effort to avoid having missing data, we conducted a web search to determine the gender of directors with these names.
Note: The analysis provided does only consider the data from May 2002 to August 2009 (peer-reviewed).