Do Women Managers Keep Firms Out of Trouble?

Running head: DO WOMEN MANAGERS KEEP FIRMS OUT OF TROUBLE?
Title : Do women Managers keep firms out of trouble?
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Author Note

DO WOMEN MANAGERS KEEP FIRMS OUT OF TROUBLE?1
Table of Contents
Chapter: Literature Review........................................................................................................3
References................................................................................................................................10

DO WOMEN MANAGERS KEEP FIRMS OUT OF TROUBLE?2
Chapter: Literature Review
Organizations that are in search of profitable opportunities takes different
kinds of risk, litigation risk being a part of it. Most of the times lawsuits are levied
on organizations because an event or a policy of the organization disturbs a
stakeholder like customers, suppliers, employees, government, community and
competitors. People have the notion that risk-averse manager creates less risky
organizational policies and faces less lawsuits in the future. But this will not
increase the value of the organization. The managers have a natural personality
quality for risk preference and that cannot be observed. The only observable
agent is the gender for the risk preference. It is observed in many studies that
women managers are more risk –averse than men. Even women investors do not
invest in high risky investments and women managers adopt safe policies for the
organization (Francis et al., 2015). Women does not show overconfidence during
decision-making nor show pride in their abilities like men. Women are found to
be more accommodating with the regulations and rules and reliable. Hence, it
can be concluded that organizations which has women managers in the top
management undertakes less risk taking policies and keeps the organization
from future lawsuits.
The power of women in the management of an organization can be
measured by two variables. Firstly, number of women in the top management of
the organization. Two or more women in the management draw the empirical
evidence and the critical mass theory. This shows that the capability of women
to form association and partnership gives her the opportunity to follow her
choice. Secondly, the total of the pay slices of women managers among the top
five managers of the organization. Influence and power of the woman in the top
management is measured by this pay slices. Operating lawsuits are those that
involves operating decision and filed by stakeholders apart from the
shareholders. According to the findings it is found that women managers follows
low risk and less litigation –prone organization rules and regulations. Women
managers more often settle any kind of matter out of court and with pays huge
amount for settlement. In this manner, the research questions that can be
prepared as follows:

DO WOMEN MANAGERS KEEP FIRMS OUT OF TROUBLE?3
Research Questions
Q1. What policies make an organization susceptible to lawsuits? How does the
power of women affect such policies?
Q2. How these policies contribute to the valuation of the organization? What are
the characteristics that lead firms to appoint more women to their board of
directors?
Q3. Are there gender differences in care orientation and to what extent is that
reflected in different board roles and behaviours of male and female directors?
The three policies that are focused on are intensive promotion and
advertising, policies that benefits shareholders but have negative impact on
other stakeholder and aggressive research and development. Women in the top
management avoids these policies and has to face 0.19 less operating lawsuits
in future, at the same time letting go of about 7% of the firm valuation. Hence
this finding suggest that few lawsuits are natural side product of increasing the
value of the policies of the organization. This shows that organizations having
women managers at the top management face few lawsuits against the
organization as the women managers avoids litigation prone and risky policies
that increase the value of the organization.
These findings highlight these questions: What makes the organization
recruit women managers? Why organizations recruit women managers when
they do not take risky policies? Maybe the organizations recruit women
managers to reduce lawsuits or have less lawsuits despite lowering the value of
the organization.
A lot of attention is given to corporate governance, so that the board of
directors truly represents their shareholder. A vital thing is having independent
directors and also having transparent voting procedures. The right of women in
the management of the company is very important, but sometimes it is
overlooked. A research was conducted by Corporate Women Directors
International (CWDI). It found that representation of women in the board of
directors across the globe remains uneven. Major OECD economies include
women on their boards. Norway is the country where 100% of the companies
have women in the board, followed by United States by 87%, Germany by 82%
and United Kingdom by 75%. While many nations lag behind. 33% of surveyed