Women on company boards face stockmarket prejudice

Aug 13, 2009
Women on company boards face stockmarket prejudice
London's Canary Wharf.

(PhysOrg.com) -- Companies with female board members fare worse on the stock market, despite performing as well on all other measures as those with all-male boards. This is the finding of a new study by the University of Exeter, published today (13 August 2009) in the British Journal of Management.

The research suggests that shareholders respond negatively to women being appointed to their boards, causing share values to decline. This is consistent with other recent research that has examined responses to the appointment of female CEOs in the United States.

The team from the University of Exeter's School of Psychology and Business School conducted a comprehensive analysis of performance data from all FTSE 100 companies between 2001 and 2005. This found that companies with all-male boards had a market valuation equivalent to 166% of their book value, while companies with at least one female board member had a market value equal to just 121% of book value.

However, the research also showed that appointing a woman to a company board does not compromise objective measures of financial performance, specifically, Return on and Return on Equity. In fact, within the data set as a whole there was evidence that companies with women on their board were a far better investment than those without.

This suggests that shareholders systematically over-value companies will all-male boards, while being unenthusiastic about the appointment of women to senior positions. This is despite there being no evidence that women's appointment has an adverse impact on company's performance.

The findings also fit with previous research from the University of Exeter which has shown that women are appointed to leadership positions when a company is in crisis. Dubbed the 'glass cliff' phenomenon, this trend involves women being placed in precarious positions when there is a high risk of failure. This has led to women being associated with weak performance.

Lead author Professor Alex Haslam, a psychologist at the University of Exeter who developed the 'glass cliff' theory with his Exeter colleague Professor Michelle Ryan, said: "Our study shows very clearly that shareholders tend to devalue companies with women board members and to chronically over-value those with all-male boards. What is not clear is whether this is because shareholders feel that women perform less well on boards than men or whether they see a woman's appointment as a signal that the company is in crisis. Whatever the reason, it is clear that this response is unwarranted, because there is no objective evidence that having female board members damages a company's performance. If anything, the opposite is true."

Source: University of Exeter (news : web)

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Sophos
1 / 5 (1) Aug 13, 2009
"What is not clear is whether this is because shareholders feel that women perform less well on boards than men or whether they see a woman's appointment as a signal that the company is in crisis."

Neither, its the perception that a woman is being appointed to be politically correct - The best person for the job may have not been hired.

All male boards have appropriately stocks since there is no hand tying done.

Perception is everything in the stock market
Corban
1 / 5 (1) Aug 13, 2009
Hypothesis: Corporations with female board members are undervalued due to prejudice, and thus money is left on the table.

Experiment: Control group of shareholders with the bias vs. those without it. We'll see how costly the premium is, and whether it's unfounded or not. This will also speak their language.
Sophos
5 / 5 (1) Aug 13, 2009
Good luck finding people willing to perform social experiments with their investments.

Right or Wrong that's why the perception of lesser qualified board members is enough to undervalue those stocks
ArtflDgr
5 / 5 (1) Aug 14, 2009
well, the market tends to be smart on such things as they are an aggregator of opinion.
recent studies have shown that women are choosing courses that are weak and easy to get higher grades in so that they have superior grades but inferior educations.

and just out a wave of studies showing that for effective companies womens styles reduce profits and efficiency (but in a mismanaged one they improve it).

since most of the attention of women is to good companies, the effect is to show that women reduce profits. ergo, stocks go lower when they are on panel. they put in expensive social type programs to bring more women in and the only explanainot is that we are equal and women are better.

The "Accent" MSG explanation of womens ability to improve everything by their presence is delusional (unlike mono sodium glutamat). do note which sex is the most gullible. they rub themselves with fruit believing sympathetic magic, they believe in magical senses, they grasp on to fads as if having no will of their own (very expensive for business), and usually so full of themselves and hard todeal with that they are in their own little worlds wandering around sprinkling their presence accent (msg).

i suspect it wont mean a thing. after all they have managed to abandon their families, increase crime and desease, debase education, and support people whose stated aim and goals are the destruction of family and the imposition of totalitarianism.

"Feminism, Socialism, and Communism are one in the same, and Socialist/Communist government is the goal of feminism." - Catharine A. MacKinnon, Toward a Feminist Theory of the State (First Harvard University Press, 1989), p.10

"No woman should be authorized to stay at home and raise her children. Society should be totally different. Women should not have that choice, precisely because if there is such a choice, too many women will make that one." -- Interview with Simone de Beauvoir, "Sex, Society, and the Female Dilemma," Saturday Review, June 14, 1975, p.18

"In order to raise children with equality, we must take them away from families and communally raise them" -- Dr. Mary Jo Bane, feminist and assistant professor of education at Welleslry College and associate director of the school's Center for Research on Woman


so maybe thats why they dont have the lives that they want? too busy following other wackaloon faddies who dictate to them how they should look, act, dress, and be...

is it any wonder that when a board is diluted by the presence of people with such common actions, they realize that such people will not stand up and do whats right but will in essence cave to ideology over corporate governance.

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