Time off work – the biggest reason why fewer women are CEOs

Women are underrepresented in CEO positions partly because they spend more time outside of the labour market during the years when their careers are most likely to take off, finds research from Aalto University School of Business.

Matti Keloharju, Aalto Distinguished Professor of Finance, and Samuli Knüpfer, Professor of Ownership at Aalto University School of Business in Finland, co-authored a study which finds that time spent outside the labour market due to parental leave, sick leave or unemployment is by far the most important contributor to gender gaps in CEO appointments.

The researchers reveal this explains 26% of the gender differences in CEO appointments and this rises to 41% among university graduates who have children.

“These gaps in women’s labour market attachment usually arise after the birth of a first child, causing their absences to increase relative to men. The gaps narrow as the children grow up but do not return to pre-childbirth levels during the 10 years following the birth of the first child,” Prof. Keloharju says.

The gender disparity in CEO appointments is also significantly influenced by prior executive experience, contributing 22% to the overall gap, and 26% in the subset of graduates who are parents. Female executives are more frequently found in departments such as personnel and public relations, whereas CEO roles are more often filled from sales or production backgrounds, which have a higher male presence.

The study’s findings are based on analysis of the careers of 143,000 Swedish graduates in business, economics and engineering (the most common fields of education for CEOs) over a period of 25 years. Data was gathered almost entirely from official Swedish government registries. The Swedish experience is interesting, because it suggests CEO gender gaps and their early-career origins arise even in an institutional setting with a long egalitarian tradition and family friendly policies.

To determine whether discrimination also plays a significant role in the continuation of a ‘glass ceiling’ for women, the researchers draw on data from Statistics Sweden’s Work Environment Survey.

They find that just 9% of female respondents reported experiencing gender-related discrimination at work, meaning it’s unlikely to play a large role in explaining the gender disparity in CEO appointments.

This study was published in the journal Financial Management, where it was honoured with the Runner-Up Award for Best Paper.

Featured Photo by ThisisEngineering RAEng on Unsplash.

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