Singapore companies with many executives over 60 tend to underperform: NUS study

SINGAPORE — Firms that load up senior roles with chronologically superior people generated lower returns on assets than those who didn’t, according to an inaugural study of executive diversity across 577 Singapore-listed companies.

Companies that appointed people with more than 10 years of industry experience to these positions fared better, and those that placed equal numbers of women and men in the top ranks delivered their best deeds to shareholders.

Trick that balance with one more woman, however, and performance plummeted, according to the joint study conducted by the Center for Governance and Sustainability (CGS) at the National University of Singapore.

CGS Director Lawrence Loh said: “The results are enlightening in guiding companies in developing their diversity policies to meet new demands from regulators and stakeholders.”

According to the report, around four in 10 board members and senior executives at local companies are aged 60 or older, and they are more common in companies with market capitalizations over $300 million.

The study covered data from companies disclosed to the stock exchange over five years from 2006 and excluded newly listed, suspended from listing, secondary listings, treasury companies and companies under receivership as of June 2021.

In line with numerous global studies, the report shows that the more diverse companies are in terms of age, education and gender, the better their performance for shareholders.

Companies in real estate and communication services performed better than the rest, Professor Loh said during a webinar on Tuesday February 22 to publish the results.

There was not enough data to study culture and ethnic diversity, as well as the gender pay gap, Prof Loh said, explaining why these metrics were not included.

The study was carried out with consultancy Connecting the Dots and Edge Strategy, and supported by DBS Bank and the Securities Investors Association of Singapore.

Singapore Exchange Regulation chief executive Tan Boon Gin said the board diversity disclosure rules have come into effect as investors increasingly recognize board diversity as a ” business imperative”.

“Some investors have gone so far as to abstain from electing male directors, when there are no female directors on the board,” he said.

Companies are raising questions about what diversity goals should look like, how to find a diverse slate of candidates and how a diverse board can get along and operate effectively, he added.

Comments are closed.