Issues of gender are prominent in the global development agenda. Although South African competition law mandates that public interest considerations must be considered as part of merger decisions, gender considerations are not explicitly included in this process.
Research purpose
This study’s two-fold objective is to assess whether mergers influence gender distribution on company boards and in executive management and whether any observed changes could be linked to specific characteristics of the mergers.
Motivation for the study
Gender diversity remains overlooked in merger and acquisition (M&A) policy research despite its importance in the global development agenda, motivating this investigation.
Research approach/design and method
The study employs a quantitative approach using secondary, pooled cross-sectional data from 80 South African mergers approved between 2010 and 2019, collected from various company financial statements and integrated annual reports, focusing on pre- and post-merger gender composition in management and board positions. Descriptive statistics, equality of means tests and ordinary least squares regressions are applied to analyse the impact of mergers on gender diversity.
Main findings
The results show a modest but statistically significant increase in female board representation post-merger, particularly in cases where the acquiring firm was local rather than international. However, changes in female representation in executive management roles post-merger were generally not significant.
Practical/managerial implications
The results highlight the need for policy interventions to promote female representation in corporate leadership, setting a precedent for broader diversity-focused policies in the Global South.
Contribution/value-add
The study contributes to the limited literature on issues of gender diversity in M&A policy (a virtually unexplored area in the South African literature) from the perspective of the Global South.
mergers and acquisitionsgender diversitycompetition policymanagementpublic interestmerger controlFunding information This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.Introduction
The South African Competition Act (Act 89 of 1998) introduced public interest considerations (PICs) as part of merger enforcement. Van Wyk, Pretorius and Blaauw (2023) define public interest broadly as the welfare of the general public – generally, the employees of the companies that are engaging in the merging process (Van Wyk et al. 2023). The concept can also be:
[A]nything of value to the community in general, any contribution to the aims pursued by the society including, as one of its principal elements, the achievement of the economic goals of the efficiency and progress. (Commonwealth of Australia 1996:8; Hantke-Domas 2003; Hess & Adams 1999:6; Van Wyk et al. 2023)
Public interest considerations warrant recognition, promotion and protection by the government and its various agencies (Hantke-Domas 2003; Van Wyk et al. 2023) and are used to address certain issues in private-sector companies such as employment, greater participation in the economy and industrial policy. These issues are of a broader interest in the national context, and these PICs must be considered by competition authorities when companies apply to merge (Nzero 2017). The advent of PICs ignited heated debates regarding how these considerations would be implemented and monitored when mergers are proposed or when a case involves prohibited conduct (Meyer 2017; Van Wyk 2022). Although the South African Competition Commission considers various PICs in evaluating proposed mergers, gender distribution, particularly in management positions, has not been explicitly included in merger review processes. Seeing that gender equality is a pressing concern globally, the South African competition commission could consider including this aspect as part of their merger review processes. Such a new PIC could assist in closing the gap between the number of male and female board members – or at least try to ensure that it is not worsened by the proposed merger. According to a report by PricewaterhouseCoopers (PwC) (2021), 96.6% of all Johannesburg Securities Exchange (JSE)–listed companies’ chief executive officers (CEOs) are male, 87.2% chief financial officers are male and 91% of executive directors are male. The report indicates that women remain overwhelmingly under-represented in leadership positions – notwithstanding society’s broader development agenda’s vision of increased gender equality and empowerment for women in Sustainable Development Goal (SDG) 5 (Maheshwari et al. 2019). In 2019, the JSE released amendments to their listing requirements that included extending the scope of section 3.84(ii), which requires companies to adopt a policy on the ‘promotion of broader diversity at board level, specially focusing on the promotion of the diversity attributes of gender, race, culture, age, field of knowledge, skills and experience’ (PricewaterhouseCoopers [PwC] 2019:31). The report (PricewaterhouseCoopers [PwC] 2019:32) also states the following:
If one looks at the composition of top leadership at JSE-listed companies, out of the total number of listed companies on the JSE on 30 April 2019, only 3.31% of CEOs were female.
While most South African companies are headed by males, the impact of mergers on gender representation has until now remained an unexplored field in the literature. Limited research exists on the topic of public interest in mergers (see e.g. Changole & Boshoff 2022; Meyer 2017; Van Wyk et al. 2023) and even less on gender aspects relating to mergers (see, e.g. Baby Maria & Hussain 2024; Halrynjo & Teigen 2024; Tjahjadi et al. 2024). Despite the fact that there is strong recognition that gender equity is integral to public interest (Bosch, Van der Linde & Barit 2020; Maheshwari et al. 2019), it is surprising that this issue is often ignored by both companies and researchers. This is also surprising, given the emphasis on the empowerment of women and gender equality in the development agenda of SDG 5 (Maheshwari et al. 2019). There is, for example, no empirical evidence that points to the patterns of restructuring within boards of directors after a successful merger has been concluded. Internationally, studies have been conducted on the impact of female-dominated management on the approach and outcomes of mergers (see, e.g. Baby Maria & Hussain 2024 on India’s banking sector; Halrynjo & Teigen 2024 in Norway; and Tjahjadi et al. 2024 in Indonesia), but very few on the impact of mergers on female representation in the workforce – with the study of Bao and Li (2024) being the exception. However, Bao and Li (2024) focused on publicly owned firms in China, with further evidence in the Global South being absent in the literature. The research gap flowing from the above observations stems from the fact that the studies mentioned above investigate how pre-merger gender distribution influences the approach and outcome of the merger process as well as the characteristics of the merged firm (Baby Maria & Hussain 2024; Halrynjo & Teigen 2024; Tjahjadi et al. 2024). However, studies that try to establish the reverse, how possible company characteristics of firms (pre-merger) influence the gender distribution of the post-merger firm, are scarce. For example, Li, Redding and Xie (2021) again deal with gender distribution of boards and management as a possible explanatory variable (Li et al. 2021) – and not as the dependent variable in a post-merger analysis. Even the study of Bao and Li (2024) suffers from weaknesses that it does not focus on all the relevant characteristics (industry, total assets and profitability) of the target firm. Our study contributes to the literature in two ways. The first is that it offers an opportunity to view the gender composition of corporate boards (CBQs) as the dependent variable. Knowing how the characteristics of merging firms may influence gender composition provides us with different insights in comparison to the various studies that do the reverse. For example, the various studies that investigate the reverse take gender composition as a point of departure and try to establish the problems and benefits that result from different levels of gender composition. Our study tries to identify if these firm characteristics are correlated with changes in the post-merger gender composition of the merged entity. This is important given the emergence of PICs as a key consideration for the merger evaluation process. Having more insight into these correlations may provide insight to regulators and/or policymakers in terms of expanding the scope of PICs to include gender considerations. The second contribution is that the perspective in our study is offered from a Global South context (South Africa) – broadening the scope and depth of the relevant target firm characteristics provided by the only other Global South study known to the authors (i.e. Bao & Li 2024). Although some studies therefore investigated the links between boards represented by women and, for example, aspects of firm performance (see Baby Maria & Hussain 2024), research on the issue of gender diversity and distribution among board members pre- and post-mergers and acquisitions in particular is limited (Ravaonorohanta 2020). Furthermore, to the knowledge of the authors, no research exists for the inclusion of gender as a topic in PICs in merger review in South Africa – a clear gap in the identified literature that sets the scene for our study. Specifically, our study aimed to answer the following research questions with reference to South African mergers in publicly listed companies: Firstly, how does the gender distribution in management positions and board representation differ between the initial/separate firms compared to the merged entity? Secondly, whether any observed changes in gender distribution could be linked to specific characteristics of the mergers. These characteristics include inter alia the industry in which the merger took place, the possible difference in total assets of both parties before the merger and after the merger, as well as the profitability of the target firm before the merger.
The real-world problem to be addressed by the above aim of our paper is the low levels of female representation on company boards and management of South African firms. We explore the possibility that such female representation could be added as a PIC when evaluating merger transactions. The current PICs deal with issues relating to unemployment, Broad-Based Black Economic Empowerment (BBBEE), specific sectors or regions, etc. Insights gained from comparing female representation before and after completed South African mergers, potential differences between local and international mergers, as well as potential determinants of changes in representation will guide the authors in formulating potential policy recommendations.
Literature reviewMerger review in South Africa
Mergers and acquisitions have been a regular occurrence in business for decades. The Competition Act of the Republic of South Africa (Act 89 of 1998) defines a merger as follows: ‘[It occurs] when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm’ (Competition Commission 1998).
It is argued that firms merge because the merger would lead to efficiency gains and lower prices (Organisation for Economic Co-operation and Development [OECD] 2025). Synergy is also often mentioned in this regard. It refers to the greater combined value of the merged firms than the sum of their individual firms/units. This will theoretically result in stronger research and development expenditure and facilities, stronger financial positions and enhanced managerial capabilities (Srinivasan & Mishra 2007). On the other hand, any horizontal merger leads to the elimination of a potential competitor and increased market concentration of the remaining firms.
Chapter 3 of the Competition Act outlines the merger review and control used in making merger decisions. Section 11 of the Act identifies and defines the three types of mergers in South Africa: small, intermediate and large mergers (Competition Commission 1998). Subsection (5) defines the three types of mergers: a small merger is a merger with a value at or below the lower threshold established in terms of subsection (1)(a)4; an intermediate merger is a merger with a value between the lower and higher thresholds established in terms of subsection (1)(a); and a large merger is a merger with a value at or above the higher threshold established in terms of subsection (1)(a) (Competition Commission 1998).
Section 12 of the Act defines a merger and states the considerations needed when mergers are being brought before the Commission. Section 12(a)(1) states that if a merger needs to be considered, the Commission or Tribunal needs to determine whether the merger will substantially lessen or prevent competition based on factors set out in subsection (2) and:
(a) if it appears that the merger is likely to substantially prevent or lessen competition; then determine – (i) whether or not the merger is likely to result in any technological, efficiency or other pro-competitive gain, which will be greater than, and offset, the effects of any prevention or lessening of competition, that may result, or are likely to result, from the merger and would not likely be obtained if the merger is prevented; and (ii) whether the merger can or cannot be justified on substantial public interest grounds by assessing the factors set out in subsection (3); or (b) otherwise, determine whether the merger can or cannot be justified on substantial public interest grounds by assessing the factors set out in subsection (3). (Competition Commission 1998:50–57)
While evaluating the potential impact of a merger on competition, the Commission or the Tribunal must judge the degree of prevailing competition in the market into which companies would like to enter through a merger (Competition Commission 1998; Van Wyk et al. 2023). As part of the process, the Commission and the Tribunal must also consider any factor that is relevant to competition in that specific market (Van Wyk et al. 2023). Since the implementation of the Act in 1998, it has become compulsory to also investigate all PICs when considering a merger, in addition to the standard competition criteria as briefly described in the previous paragraph. In section 12(a)(3), to make sure if a merger can be justified on public interest grounds, the Commission and Tribunal must consider the effect that the merger will have on a particular industrial sector or region, on employment, on the ability of a small business or firm, controlled or owned by previously disadvantaged persons to become competitive, and on the ability of national industries to stay competitive in international markets (Competition Commission 1998). In 2018, the Act was amended to include that the competition authorities must consider the effect that the merger will have on the promotion of a greater spread of ownership to increase the levels of ownership by historically disadvantaged persons and workers in firms in the market. The types of PICs considered, therefore, range from employment, Broad-Based Black Economic Empowerment (BBBEE) and Small, Medium, and Micro Enterprises (SMME) conditions, and particular industrial sector or region conditions, to the inclusion of supplier development funds as conditions to merge (Van Wyk et al. 2023).
Taking all this into account, South African merger review, however, does not include broader diversity aspects (e.g. gender diversity in the boardroom) in the merger review process for the inclusion of PICs beyond that of the Broad-Based Black Economic Empowerment (BBBEE) condition – again a surprise given the focus on gender equality in SDG 5 (Maheshwari et al. 2019). The next section briefly highlights notable studies in the limited literature pertaining to merger review and gender diversity, which will form the focus of our investigation.
Merger review and the inclusion of gender aspectsInternational perspective
The topics of gender equality and more equitable representation of women in the workplace have become very important (Maheshwari et al. 2019) and have attracted significant political and social debate among private sector companies and individuals (Ravaonorohanta 2020). Furthermore, issues of gender equality are becoming more important in the quest for global development – see SDG 5 (Maheshwari et al. 2019). In this context, the emergence of ‘gender lens investing’ (GLI) as an investment strategy is coming to the fore in the last couple of decades – in the global North and now more and more in the global South (Maheshwari et al. 2019). The GLI strategy is defined as ‘…an intentional incorporation of gender analysis into financial due-diligence during the investment process to promote social and/or economic empowerment of women in addition to financial returns’ (Maheshwari et al. 2019:8). The ultimate aim of the strategy is to empower women and transform their lives – also in the Global South (Robino & Jackson 2022). To achieve these goals, GLI in emerging markets must be accelerated and promoted by role-players who have superior insight into the needs at the grassroots level, that is, the asset owners and managers, company founders, employees, researchers and policymakers based in the Global South (LaFrance et al. 2021; Robino & Jackson 2022).
However, existing studies on gender issues regarding company boards often focus on the gender composition as the point of departure and then offer conclusions flowing from specific interventions. For example, a recent study by Halrynjo and Teigen (2024) researched the association between quotas for CBQs and the gender composition of executive management among Norway’s 200 largest companies but did not find a positive correlation between CBQs and an increase in the number of women in executive positions (Halrynjo & Teigen 2024). Zajiji, Wilson-Prangley and Ndletyana (2021), who introduced a South African perspective to these general types of studies, concluded that one cannot merely consider numeric representation when examining whether or not representation by women on boards is achieving critical mass to change deep-rooted dynamics working against the role of women (Zajiji et al. 2021).
Studies in the international literature that do focus on the issue of gender and merger do so with gender as an explanatory variable and not as the dependent variable. Ravaonorohanta (2020) investigated whether the gender diversity of a company’s board would have any effect on merger and acquisition (M&A) behaviour and bidding, with the use of bids by public Canadian companies between 2012 and 2017. The reason for the study was that there is a growing positive link between women in leadership positions and increased firm performance. Along with this indication, it is emphasised that women generally behave more ethically than men, are more risk-averse and make better decisions1 (Chen, Crossland & Huang 2016; Dowling & Aribi 2013; Ravaonorohanta 2020).
The increased representation of women on company boards can have a positive effect on organisational outcomes. Existing literature on the Financial Times Stock Exchange (FTSE) 100 Index in the United Kingdom (UK), from 2000 to 2011, by Dowling and Aribi (2013), indicated that with an increased representation of women on boards comes the lower level of acquisitiveness. Levi, Li and Zhang (2014) also researched the link between boards represented by women and M&As on the Standard & Poor’s 1500 Index in the United States between 1997 and 2009. They found that a more gender-diverse board is often associated with lower levels of M&A bids and also with lower bid premiums, and that firms with more women on their boards tend to engage in smaller M&A transactions (Chen et al. 2016; Levi et al. 2014).
The main drivers between the differences in men and women on boards when it comes to the attitude towards M&As are that women are more risk-averse and that men tend to be overconfident (Ravaonorohanta 2020). However, the tendency for women to be risk-averse and for boards represented by women to receive smaller M&A bids should not be seen as negative aspects. Gender diversity in boards helps to promote the effectiveness of board monitoring (Ravaonorohanta 2020). It is suggested that when there is an increased representation of women on CBQs, it attenuates executives’ and directors’ overly optimistic views of M&A outcomes, resulting in decisions of a higher quality (Ravaonorohanta 2020).
Norway was the first country to have a mandatory CBQ system requiring a quota of board genders in listed firms (Halrynjo & Teigen 2024). In a study conducted on firms in Norway, Sweden and Denmark between 2002 and 2008, Yang et al. (2019) also found that women exhibit personal and behavioural traits and attitudes that keep firms away from too risky decisions that will impair firm value. Furthermore, researchers such as Arun, Almahrog and Aribi (2015), Chen et al. (2016) and Zalata et al. (2019) investigated the effect of increased gender representation on opportunistic behaviours impairing earning quality. Arun et al. (2015), for example, investigated the effect thereof on 1220 UK firms from the FTSE 350 Index. The research revealed that corporate companies that have a more gender-diverse board will have much more conservative accounting practices and are less likely to engage in practices that will allow managers to increase their own remuneration packages in a fraudulent way.
Of particular relevance to our study was the paper by Bao and Li (2024), as it was the only paper we could find that has the same focus for a country (China) as ours for the Global South. Bao and Li (2024) focused their attention on Chinese public firms involved internationally in cross-border M&A transactions from 2008 to 2019. They specifically examined how the gender composition of acquiring firms’ boards adapts to align with the gender-equality norms of target countries in these international cross-border M&A transactions. It was interesting that they found a tendency among acquirers to increase board representation by women when the target country has a more gender-equal culture – using the Heckman two-step method as a robustness check to address possible selection biases (Bao & Li 2024). Of interest to our study were their findings that board adjustments are more likely in deals involving larger targets, higher monetary values and significant communication or legitimacy barriers (Bao & Li 2024). This indicated that these adjustments serve strategic purposes. They further found that such board changes are associated with synergy gains, improved firm performance and increased levels of innovation in the post-acquisition period (Bao & Li 2024). These elements formed the foundation for the empirical model of our research into possible factors associated with changes in the gender distribution after the merger process in South Africa.
Corporate board gender distribution in South Africa
In South Africa, research on the gender distribution in top management of firms and the issue of board gender diversity related to merger decisions, as well as the gender distribution of boards before and after a merger, is severely limited. A report compiled by the University of Stellenbosch Business School cites information collected from the 2017 Women in Leadership Census report by the Business Women’s Association of South Africa. This report revealed that in 2017, 20.7% of JSE-listed companies had female board directors, only a 6-percentage point increase from 2008, when there were 14.3% female directors (Bosch et al. 2020).
Furthermore, in 2017, the boards of 94 JSE-listed companies contained at least 25% female board members. Bosch et al. (2020) note that while this percentage seems impressive, it has not remained consistent, with only 26 companies consistently having 25%+ female board members between 2012 and 2017. Examples of a few companies that are consistent in their female board representations are: Adapt IT Holdings, ArcelorMittal SA, Clicks Group and Grand Parade Investments (Target Firm in the Burger King SA merger of 2020/2021 in which Emerging Capital Partners (ECP) Investments was the acquiring firm).
The overwhelming percentage of women are also in non-executive top management positions. In JSE-listed companies, 86% of female board members are there as non-executive directors and only in an oversight capacity. This indicates that there are not enough female senior managers in South African companies. However, in the case of state-owned enterprises (SOEs), the picture looks different, where women make up 41.2% of all directorships, and all SOEs have at least two female board members.
In terms of JSE-listed companies in 2017, when comparing the actual percentage of women in board membership positions with the economically active women population (see Table 1), black and coloured women are seen to be under-represented and Indian and white women are over-represented. Regarding SOEs, black and Indian women are seen to be over-represented and white and coloured women are under-represented (Bosch et al. 2020).
Racial profiles of female directorships of Johannesburg Securities Exchange–listed companies and state-owned enterprises in 2017 (number of directors in brackets).
2017
Race
JSE-listed companies8
SOES9
Economically active population (women) SA10
Black African
58.7% (300)
<
82.8% (72)
>
79%
Coloured
7.4% (38)
<
2.3% (2)
<
9.7%
Foreign
2.5% (13)
-
0.0% (0)
-
-
Indian
8.2% (42)
>
6.9% (6)
>
2.4%
White
21.9% (112)
>
8.0% (7)
-
8.8%
Other
1.3% (6)
-
0.0% (0)
-
-
Source: Bosch, A., Van der Linde, K. & Barit, S., 2020, Women on South African boards: Facts, fiction, and forward thinking, University of Stellenbosch Business School, Cape Town
The previous paragraphs painted the picture in 2017, based on the 2017 Women in Leadership Census. To the best of our knowledge, the most recent census of this kind reflects the situation in 2021 (see KPMG South Africa 2023) when 27.7% of board members of JSE-listed companies were women. The latest report by Spencer Stuart (2024) reports on female representation on the boards of the top 50 companies listed on the JSE. In 2023, 35% of board members of these companies were female. It increased to 37% in 2024.
A few countries have implemented measures to increase female representation among company boards. Countries like Germany, Norway and Spain have mandatory targets that boards must meet in terms of the percentage of company boards that must be women (Halrynjo & Teigen 2024). Furthermore, Australia and the UK have voluntary measures suggesting that at least 30% of company boards should have female representation. In the South African perspective, there is no such targeted legislation that forces companies to include women on their boards of directors.2 Focusing on Chinese firms, Bao and Li (2024) employed three explanatory variables, also included in our analysis, to explain gender composition, that is, the value of total assets, the profitability of the firms involved and the specific industry. In the South African context, Van Wyk et al. (2023) used the same three mentioned variables in a study identifying potential factors leading to the imposition of PICs on South African merger transactions. Their study also added the location of the acquiring firm, whether it be a local South African firm or an international firm.
MethodologyData of interest, population and sample
To form a clear picture of gender representation on boards and in management after a merger, we allowed for enough time to elapse for possible changes to take place and to allow for a sufficient number of financial statements of the merged entity to be published. Therefore, the cut-off date for the analysis is mergers that took place up to 2019.
The empirical analysis employed a quantitative methodology based on secondary pooled cross-sectional data for 80 mergers from 2010 to 2019. The foundation for this analysis was a database of historical merger cases involving South African firms, originally compiled by Van Wyk et al. (2023). The compilation of the database recorded the available details regarding the male and female workforce as well as the gender distribution of management and board members – both pre- and post-merger. Various other aspects of each merger case were also included, such as the industry involved, whether it was a local or international merger, profit positions of the target and acquiring firm pre-merger. This information was painstakingly gathered from official case-specific documents in the public domain as well as annual reports from all relevant companies. This database initially comprised a population of 221 mergers during the period from 2010 to 2019, which included PICs as conditions to merge. From the population, the database for this study was finalised, consisting of a sample of 80 mergers. The number of data points decreased so drastically because not all these companies are listed companies and are not required to publish their financial statements or integrated annual reports if they are not listed on an official exchange. Therefore, the acquiring firms of the 80 mergers used in this study are all publicly listed companies (both local and international), as they are required by law to publish their financial statements and annual reports, which were used to collect the data of interest. We amended publicly available South African merger data to include gender representation. The gender data are only available from the financial statements and integrated annual reports. Our analysis compares the composition of company boards before and after the merger process. In allowing for the merger process to be completed and the new boards to be functional, we analyse the board compositions 3 years after the merger was completed. This limits our database to mergers completed in 2019 and the board representation 3 years later in 2022. Compositions of these boards are reflected in the financial statements in 2023. Mergers completed in 2024 would probably still be in the process of appointing board members – and it would not be reflected in their 2024 financial statements. Considering the situation 3 years after merger and waiting for the financial statements to be published therefore limits our analysis to mergers completed in 2019.
Data collection
The study therefore utilised the collected data from the financial statements and integrated annual reports of the 80 listed companies that all formed part of the research sample. As the study examined changes in the representation on company boards of directors and executive management after a merger, with a focus on whether there was an increase or decrease in the number of women in these positions, the following data were collected and included as variables: the primary acquiring firm and primary target firm, the industry in which these companies were involved, the number of men and women on the board of directors and executive management of the acquiring firm before the merger, the number of men and women on the board of directors and executive management of the acquiring firm 3 years after the merger, the value of total assets of the acquiring firm before and after the merger, the profits of the target firm and whether the acquiring firm was a local or international firm.
Data analysis
Our data analysis was essentially a two-step process. Firstly, we established how the gender distribution changed before and after recent South African mergers (see Table 2–Table 4 in the Results and discussion section). The analysis started with a description of the ratio or share of female board members or managers. The aim was to determine whether the gender distribution of boards and top management did indeed change post-merger or not, and if so, to what extent. To this end, tests for equality of means and medians were performed to distinguish between the statistically significant and insignificant changes.
Descriptive statistics.
Variable
Minimum
Maximum
Mean
RASSETSBEFORE
2.34 × 108
4.14 × 1012
2.98 × 1011
RASSETSAFTER
3.60 × 109
2.19 × 1016
3.38 × 1014
RPROFTAR
−3.25 × 1011
6.86E × 1011
5.57 × 109
Female representation before and after merger transaction.
Descriptive statistics
Female share on board
Female share in management
Before (%)
After (%)
Before (%)
After (%)
Mean
18.1
22.6
11.0
13.2
Median
18.2
22.2
4.2
10.1
Maximum
44.4
75.0
60.0
77.0
Minimum
0.0
0.0
0.0
0.0
Observations
80.0
80.0
80.0
80.0
Reported in % format, rounded to one decimal.
Change in female representation per acquiring firm category.
Indicators of female representation
Acquiring firm (%)
Local
International
Board increase
61.11
53.85
Board same
18.52
26.92
Board decrease
20.37
19.23
The second step was to establish possible reasons (in the firm characteristics) for the changes observed. Econometric analysis in the form of regressions was performed in EViews to test the potential influence of selected independent variables on the change in gender distribution (dependent variable) after the merger.
Ethical considerations
Ethical approval to conduct this study was obtained from the North-West University (NWU) Economic and Management Sciences Research Ethics Committee, with the approval number NWU-00873-21-A4. The study exclusively made use of secondary data in the public domain.
Results and discussion
The sample covered 80 South African merger transactions that took place between 2010 and 2019. These transactions were approved by the South African Competition Commission, because at least the target firm was a local firm. The acquiring firm could be either local or international. More recent mergers were excluded to allow enough time to elapse after the merger for the merged entity to establish a new management team and a new board and to publish financial statements.
Of the 80 merger transactions, the acquiring firm was local (South African) in 67.5% of the transactions. No fewer than 18 industries were represented. The following list indicates the most represented industries in declining order, with the share of total transactions in brackets: manufacturing (30%), property (12.5%), mining (7.5%), finance (6.25%), wholesale (6.25%) and medical (5%).
Table 2 summarises some descriptive statistics calculated for some of the key variables included in the regression analysis. All values are in the local currency (South African Rand) and are expressed in real terms, in constant 2019 prices. The amount for RASSETSBEFORE indicates the value of total assets of the acquiring firm before the merger, and RASSETSAFTER indicates the value of total assets of the merged entity after the merger. The mean values point towards very large entities. RPROFTAR represents the profit of the target firm in the year when the merger was filed. The majority (53.8%) of the target firms in the sample reported a zero profit, 37.5% reported a positive profit, and 8.7% a loss (or negative profit).
With the focus of the paper on the gender representation on the company boards and in the management team, Table 3 indicates the share of these two categories made up of women. The ‘before’ ratio is calculated for the combined boards and management teams of the two entities before the merger and the ratio for the newly established entity for the ‘after’ ratio.
The ratios highlight a few observations. An alarming discovery is the fact that, both before and after the mergers, certain firms had no female representation either on their boards or in their management teams. Interestingly, the maximum representation for the two categories is almost the same, at between 75% and 76.9%. However, the mean ratios indicate a tendency to have relatively more women on boards as compared to the management teams. Although the mean ratio increased after the merger for both categories, the mean ratio for management after mergers was still below the mean ratio for boards before the mergers. Furthermore, the mean ratio of 22.6% after these South African merger transactions was far below the Norwegian requirement of 40% for each gender (Halrynjo & Teigen 2024).
To test whether the difference in the recorded ratios was statistically significant, various equality of means tests were employed, namely, the t-test, Anova F-test, Satterthwaite–Welch t-test and Welch F-test. The last two accounted for differences in variance as well. Based on all four tests, the difference in the mean board ratios before (18.05%) and after (22.52%) merger was statistically significant at 5%, or alpha = 0.027, to be more specific. The same statistics to test for a difference in the median values did not point towards a statistically significant difference. Repeating the tests for the difference in ratios regarding management teams did not provide any statistically significant differences – neither for the difference in means nor for the difference in medians.
Given the observed statistically significant difference in board ratios overall, further analysis indicated a potential difference between the outcomes of mergers involving local South African firms as the acquiring firm compared to international acquiring firms. The local acquiring firms were more likely to increase the female representation on the boards after the merger – see Table 4.
In our sample, the female ratio on the company board increased in 61.11% of the cases when the acquiring firms were local. For international acquiring firms, an increase was observed in 53.85% of the cases. International firms reported a higher percentage of cases where the board representation was the same afterwards, while the percentage of firms where the ratio decreased was almost the same for local and international firms.
The statistical tests indicated that the observed difference between the mean values of female representatives for the two groups (local and international acquiring firms) is not statistically significant. However, representation for the two groups may be influenced by different factors. We now take the analysis further and delve deeper to establish if the same firm characteristics can potentially explain female representation for the two groups. Comparing mean values, as in Table 2 and Table 3, provides only a small one part of the puzzle. Previous studies indicated that the South African competition authorities tend to evaluate local and international mergers differently – see, for instance, Van Wyk et al. (2023), who found, while controlling for other variables as well, that PICs are more likely to be imposed on mergers if the acquiring firm is an international firm. One could also logically assume that local and international acquiring firms are driven by different motivations – therefore the need to establish which factors can best explain the changes in representation levels. The observation that the mean values for local and international acquiring firms do not differ significantly does not rule out the possibility that their determinants may differ. The difference in statistical significance of the included explanatory variables for the two sub-groups (Table 5) gives credence to the hypothesis that the determinants do vary between the two groups. The last part of the empirical analysis involved ordinary least squares regressions performed based on our pooled cross-sectional data for 80 mergers from 2010 to 2019. The dependent variable is the change in the percentage of women before and after the merger. A positive/negative value would indicate the percentage points with which female representation had increased/decreased. The independent variables included dummy variables for the different industries (CONSTRUCTION, FINANCE, MANUFACTURING, MINING), change in total assets (CHREALASSETS) indicating the difference in total assets of both parties before the merger and after the merger and profitability of the target firm before the merger (RPROFTARGET). Including the real monetary values of assets and profit in levels led to very small coefficients. Because the negative and zero values prevented us from including the values in logarithmic format, these amounts were divided by 1015. Table 5 summarises the estimation results.
Regression results.†
Variables
Local acquiring
International acquiring
Estimated coefficient
Probability
Estimated coefficient
Probability
Dependent variable: Change in board ratio
Constant
0.0174
0.3934
0.0484
0.3077
CONSTRUCTION
***0.1202
0.0048
-
-
FINANCE
**0.2236
0.0251
0.0116
0.8075
MANUFACTURING
**0.0665
0.0345
−0.0357
0.5151
MINING
0.0002
0.9965
-
-
CHREALASSETS
**0.0435
0.0286
**0.0053
0.0312
RPROFITTARGET
−257.61
0.6723
**104.53
0.0329
Obs
53
-
26
-
Adjusted R-squared
0.1462
-
−0.0440
-
Dependent variable: Change in management ratio
Constant
*-0.0468
0.0935
0.0514
0.2625
CONSTRUCTION
*0.1353
0.0844
-
-
FINANCE
**0.0817
0.0357
−0.0446
0.3667
MANUFACTURING
**0.1529
0.0287
−0.0186
0.7431
CHREALASSETS
***0.0682
0.0000
−0.0027
0.2369
RPROFITTARGET
***6579.6
0.0000
10.011
0.8400
Obs
53
-
26
-
Adjusted R-squared
0.1247
-
−0.1642
-
, All regressions estimated with Huber–White–Hinkley (HC1) heteroskedasticity consistent standard errors and covariance.
Statistically significant at 10% (*); 5% (**); 1% (***).
The first part of Table 5 refers to changes in female representation on boards and the second part to representation in management teams. Regressions were estimated in two sub-groups, one for local acquiring firms and one for international acquiring firms. The sample of 80 mergers was quite small and did not really allow for smaller sub-samples. However, even with these small samples of 53 and 26 observations, respectively, statistically significant results were produced. In the local acquiring sample, the coefficients of all the dummy variables (except for MINING) were significant, and all were positive. In these industries, a higher percentage of women was present on boards after the merger compared to the situation before. These positive coefficients confirm the overall tendency for local firms to appoint more female board members, as reflected in Table 3. Bigger firms, as indicated by a large increase in the value of real assets, are more inclined to increase their female ratio.
None of the dummy variables in the international sample rendered statistically significant results. However, both indicators in monetary values, change in real assets and the level of profits of the target firm, ended up with positive and statistically significant coefficients. Bigger firms and more profitable target firms are associated with increased female representation.
Although there was no significant change in female representation in management after the merger – see Table 3 – regression estimations were also run on the change in female ratios in management. The bottom part of Table 5 reports the results. All the estimates for local acquiring firms were significant at 10% at least. However, there were no significant estimates for international firms. This may partly be because of the small sample of international acquiring firms, although there were significant estimates for change in board representatives. The constant for local firms was negative and significant at 10%. All the dummy coefficients were positive and statistically significant. It seems as if local acquiring firms tended to increase the female cohort of management after mergers in these more important industries. The last two variables were significant at 1%. Larger mergers, as well as more profitable target firms, led to relatively more women as part of management.
Drawing the results together, only 17 of the 80 mergers displayed reduced female representation after the merger. The possibility of evaluating the possible impact of a merger on female representation on boards and in management as a whole, as part of an expanded set of PICs, may prove useful to contribute to improved levels of gender diversity in South Africa’s corporate environment.
Conclusions
The current development agenda as accepted in the SDG 5 places significant emphasis on issues of gender and gender equality in particular (Maheshwari et al. 2019). As indicated in the discussion and literature review, women were found to be overwhelmingly underrepresented in company boards and top management (Bosch et al. 2020). Many countries have responded through legislative efforts, for example, mandatory representation of women on company boards in Norway. In South Africa, there is no comparable legislation.
However, South African competition law and merger review protocols include various legislations and PICs, such as employment, Broad-Based Black Economic Empowerment (BBBEE) and the inclusion of a particular industrial sector or region, but no legislation that informs on the necessary gender representation in top management in companies or even at the employee level. Despite the fact that most South African companies are headed by males, the impact of mergers on gender representation is essentially an unexplored field in the literature. There is, for example, (to the best of our knowledge) no empirical evidence available in South Africa that points to the patterns of restructuring within boards of directors after a successful merger has been concluded.
With the above as background, our study had two primary research questions with reference to South African mergers. Firstly, how does the gender distribution in management positions and board representation differ between the initial/separate firms compared to the merged entity? Secondly, can potential changes in gender distribution emerging from answering the first objective be linked to specific characteristics of the firms involved in the mergers? To this end, we used data from 80 South African mergers approved between 2010 and 2019. The data were carefully and painstakingly collected from various company financial statements and integrated annual reports.
Our analysis of female representation on boards and in management before and after 80 South African merger cases indicated that there is a statistically significant increase in women on boards. There are also indications of an increase in female representation in management, although it is not statistically significant. Local (South African) acquiring firms appear to be more inclined to increase female representation on boards after mergers compared to international acquiring firms. Local firms also appear to be inclined to increase the ratio of women on boards in some of the more dominant industries.
We compared our results with the limited available literature. In a study on mergers involving Chinese acquiring firms, Bao and Li (2024) found that board adjustments are more likely in deals involving larger targets and higher monetary values. Our results confirm this finding. For both samples of acquiring firms, larger deals increase board representation. More profitable target firms and larger merger deals also increase the ratio of women relative to men in management roles if the acquiring firm is local. Our results present a contribution and extension of existing knowledge from the perspective of the Global South.
We accept the possible limitations of our sample in terms of size and duration of our evaluation. However, given that we used a 3-year post-merger window for changes to transpire, we used all the available datapoints. Therefore, we argue that our results can help to inform evidence-based policy options – like the ones mentioned in the following paragraph – while at the same time logically suggest that this database must be continuously updated. This study can form the baseline for a repeat of the study – for the longest possible time period allowed by the data at the time. Future studies can also include the impact of ‘GLI’ as part of a future research agenda.
Given the importance of gender in the broader development discourse and the fact that South Africa does not have specific gender quotas for CBQs, like Norway, for instance, the chief policy recommendation would be that the Competition Commission of South Africa include gender representation on boards as well as management teams as a PIC while assessing potential merger transactions. More specifically, that the female-to-male ratio after the merger should not be lower than before the merger transaction, and in cases where female representation was zero before the merger, it should at least improve after the merger. Board and management compositions could be monitored for 5 years after the merger, and any transgressions could be penalised with fines. We do not expect that such an additional consideration would scare potential investors. Given the trends observed in our analysis, it seems as if such an added requirement would not affect too many transactions. In only 17 of the 80 mergers, female representation was lower after the merger. The adoption of this new proposed PIC could increase female representation on boards and in management in general, contributing to much-needed improved levels of diversity in South Africa’s corporate environment. However, it also remains important that care must be taken not to use merger review and PICs to address societal issues that may be better suited to be addressed in other spheres of economic policy.
AcknowledgementsCompeting interests
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
CRediT authorship contribution
Anton van Wyk: Conceptualisation, Formal Analysis, Investigation, Methodology, Software, Writing – original draft, Writing – review & editing. Anmar Pretorius: Conceptualisation, Formal Analysis, Investigation, Methodology, Software, Writing – original draft, Writing – review & editing. Derick Blaauw: Conceptualisation, Investigation, Methodology, Writing – original draft, Writing – review & editing. All authors reviewed the article, contributed to the discussion of results, approved the final version for submission and publication, and take responsibility for the integrity of its findings.
Ethical considerations
Ethical clearance to conduct this study was obtained from the North-West University Economic and Management Sciences Research Ethics Committee (No. NWU-00873-21-A4).
Data availability
The database utilised for the empirical analysis of this study is privately stored and reasonable requests can be forwarded to the corresponding author for consideration by the authors.
Disclaimer
The views and opinions expressed in this article are those of the authors and are the product of professional research. They do not necessarily reflect the official policy or position of any affiliated institution, funder, agency or the publisher.
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How to cite this article: Van Wyk, A., Pretorius, A. & Blaauw, D., 2026, ‘Issues of gender within the public interest sphere in South African merger reviews’, Journal of Economic and Financial Sciences 19(1), a1059. https://doi.org/10.4102/jef.v19i1.1059
One of the anonymous reviewers made the important point that a more diverse leadership also provides more success improved completion rates and in terms of projects.
One of the anonymous reviewers correctly pointed out that gender diversity is encouraged through frameworks like King IV, and B-BBEE, but not enforced.