Golf Buddies and Board Diversity

Sumit Agarwal is Professor of Finance at the National University of Singapore. This post is based on a paper authored by Professor Agarwal; Wenlan Qian, Associate Professor of Finance at the National University of Singapore; David Reeb, Professor of Finance at the National University of Singapore; and Tien Foo Sing, Associate Professor of Finance at the National University of Singapore.

Studies have shown that firms benefit from corporate boards comprising men and women. Yet in 2014, women’s share of board seats in developed economies averaged 16.7 percent, varying from 3 percent in Japan to 19 percent in the US, and 30 percent in France. There is a gender glass ceiling in board representation. But women can overcome it, and some do.

In our paper, Playing the Boys’ Game: Golf Buddies and Board Diversity, forthcoming in the American Economic Review: Papers and Proceedings, We explore the role of informal networks and gender ceiling in the executive labor market using data on golf games. Specifically, we study whether women who play golf—a largely male-dominated sport—are also more likely to serve on the board of directors of publicly listed companies.

In corporate Singapore, golf is an important social network tool. But research shows that social networks often operate along gender lines. As such, golf being a male-dominated sport lends itself to reinforce social networks and bonding among men, potentially limiting its usefulness to female golf players.

However, one may argue that playing golf allows women to enter prominent social networks and increase their involvement in the labor market. By engaging in a predominantly male activity, women may gain additional social capital, even beyond that of male golfers. In other words, “playing the boys’ game” may render female golfers being accepted by predominantly male corporate boards.

In the study, we collect data of the directors of 431 Singapore-based firms listed on the Singapore Stock Exchange over a 15-year period. These firms have been actively traded in the last two years. Firms classified as REIT, Venture Capital and Mutual Fund were excluded. We also gather data from golfers’ handicap books, and match the director data with their golfing data. From these two sources of information, we generate a comprehensive database that includes 10,584 golfers and 1,646 directors.

Almost 9 in 10 golfers in our sample are male. Among the board of directors, 90.6 percent are male. The odds ratio by gender and board membership stands at 0.094 for females, suggesting that on average, females are 90 percent less likely to serve on the boards of directors. While this may not be all that surprising, does playing golf help break the gender glass ceiling in board representation? We found that golfers have a higher probability of holding a directorship with an odds ratio of 59.9. However, when comparing the odds ratio by gender, we found that playing golf is associated with a stronger propensity to serve on corporate boards for women than for men by 54 percent. Women who play golf are 74 percent more likely to serve on corporate boards.

Interestingly, this was particularly more evident among firms with larger rather than smaller market capitalization. For small firms, golfing did not affect female board membership. Instead, female golfers are 125 percent more likely to serve on a board relative to male golfers in large firms. This provides some evidence of social capital at work. Larger firms are presumably more hierarchical. To be able to get on the board despite the hierarchy suggests social capital is at play.

The use of social capital is further reinforced when we sort the firms by industry. Industries that have low female representation have prohibitive barriers to networking. But if such industries have a higher female board representation relative to high-female-representation industries, and these female board members are golf players, then it is likely that social capital is present. Indeed so. We observe that women are more likely to serve on the board of directors in low female representation industries (by 117 percent) if they play golf, relative to their male counterparts. Finally, we find that there is no difference in golf skills between female directors and non-directors, and between male directors and non-directors.

Our study highlights two important issues. First, there is a gender glass ceiling and there are means to overcome gender disparity. In particular, engaging in social activities that run counter to social norms or behaviors is an important mechanism used by women to partially mitigate this glass ceiling in corporate boards. “Playing the boys’ games,” in this case golf, is effective in boosting women’s representation on corporate boards.

Second, social capital and networking foster career outcomes in the executive labor market. While this works for both men and women, women’s involvement in a male-dominated social activity such as golf appears to enhance their probability of serving on a board in a large listed company.

The full paper is available for download here.

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