Research Says: Women on Boards – How Investors React

Study: How Investors React when women join boards (Harvard Business Review, July 2012, Macrow, Gallant)

Finding: When women join boards of directors, the market does not reward the company, as measured by stock price.

Note about The Woman Effect Research Index: This study was performed by researchers not affiliated with InPower Women. Our Research Index includes all relevant research to the subject of women, business and power. We do not influence how the research was conducted or reported by the researchers. In our abstracts, we focus on pulling out the most actionable advice for individual women. To suggest additional research we should index, or discuss our choice of abstract focus, please contact us

InPower Insight: There’s been quite a bit of research that shows that when when women join corporate boards in non-minority numbers (i.e., 30% or more), company performance goes up. This research shows that while large shareholders understand this, broader cultural bias (in the form of smaller stockholders) still penalizes a company for putting women on their boards.

Summary:

Researcher Frank Dobbin of Harvard found that after women joined boards at relative companies, stock price tended to decrease slightly, even though corporate performance did not decline. This is caused by investor bias, particularly among those investors who hold a smaller shares of the company.

While institutional shareholders, who come under public scrutiny, that own large blocks of shares actually increased their shares when a women was put onto a corporation’s board, small holding firms cut back. The researchers found that these smaller stockholders associated leadership positions with men.

Career Coaching Tip: The good news here is that women on boards help  companies succeed and sophisticated investors know this. The same applies to your career. Smart investors, bosses and leaders know talent when they see it, so make sure you’re not hiding yours.

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