Description of variables
| Variable | Description |
|---|---|
| Monitoring tasks | This score measures a board’s capacity to perform monitoring functions. The capacity is assessed whether the board has a policy that ensures effective monitoring and how the policy is implemented; the board has internal information tools for the monitoring of top management and CEO personnel; the board exercises monitoring tasks through the establishment of board committees; and the board has financial experts within its auditing committee, the percentage of independent directors on board committees, the number of board meetings held and average board attendance |
| Strategy tasks | This score measures a board’s capacity to create, communicate and monitor a company’s strategy. The capacity is assessed whether the board has a policy for maintaining an overarching vision and strategy that integrates financial and extra-financial aspects of its business into its day-to-day decision-making processes; the board describes the implementation of its strategy through a public commitment; the board monitors its strategy through ratings or an external committee; and the board reports the challenges or the opportunities linked to the strategy |
| Advisory tasks | This score measures a board’s capacity to perform advising tasks by leveraging varied board members experiences. It includes a set of items that assess whether the board has a policy for maintaining a well-balanced membership of the board, in terms of cultural, experience, knowledge and gender diversity; the board has the internal tools to develop and implement the abovementioned policy; and the board monitors and periodically assess the competences and the experiences of its board members |
| Women on boards | The percentage of women on boards |
| Proportion point of 20% | A dummy equal to 1 if the proportion of women on a board is equal to or greater than 20% and equal to 0 otherwise |
| Proportion point of 33% | A dummy equal to 1 if the proportion of women on a board is equal or greater than 33% and equal to 0 otherwise |
| Independent directors % | The percentage of independent board members as reported by the company |
| CEO duality | A dummy equal to 1 if the CEO is also the chairman and equal to 0 otherwise |
| Board size | The total number of board members at the end of the fiscal year |
| Firm size | Total assets as reported by the company |
| Variable | Description |
|---|---|
| This score measures a board’s capacity to perform monitoring functions. The capacity is assessed whether the board has a policy that ensures effective monitoring and how the policy is implemented; the board has internal information tools for the monitoring of top management and CEO personnel; the board exercises monitoring tasks through the establishment of board committees; and the board has financial experts within its auditing committee, the percentage of independent directors on board committees, the number of board meetings held and average board attendance | |
| This score measures a board’s capacity to create, communicate and monitor a company’s strategy. The capacity is assessed whether the board has a policy for maintaining an overarching vision and strategy that integrates financial and extra-financial aspects of its business into its day-to-day decision-making processes; the board describes the implementation of its strategy through a public commitment; the board monitors its strategy through ratings or an external committee; and the board reports the challenges or the opportunities linked to the strategy | |
| This score measures a board’s capacity to perform advising tasks by leveraging varied board members experiences. It includes a set of items that assess whether the board has a policy for maintaining a well-balanced membership of the board, in terms of cultural, experience, knowledge and gender diversity; the board has the internal tools to develop and implement the abovementioned policy; and the board monitors and periodically assess the competences and the experiences of its board members | |
| The percentage of women on boards | |
| A dummy equal to 1 if the proportion of women on a board is equal to or greater than 20% and equal to 0 otherwise | |
| A dummy equal to 1 if the proportion of women on a board is equal or greater than 33% and equal to 0 otherwise | |
| The percentage of independent board members as reported by the company | |
| A dummy equal to 1 if the CEO is also the chairman and equal to 0 otherwise | |
| The total number of board members at the end of the fiscal year | |
| Total assets as reported by the company |
Notes:
The scores are calculated by equally weighting and z-scoring all underlying data points and comparing them against all companies included in Datastream. The resulting percentage is therefore a relative measure of performance that is z-scored and normalized to better distinguish values and position scores at 0 to 100%. A z-score, or “standard score,” expresses the value in units of standard deviation of the value from the mean value for all companies
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