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Submitted via IRC for Runaway1956
Company Stock Prices Fall When Women Are Added To Boards Of Directors
Turns out that many companies who seek to embrace equality by any means could actually be doing their shareholders a disservice. But hey, we thought equality of outcome was a guaranteed fast track to utopia! What happened?
In fact, many companies experience stock price declines when women are added to the board of directors, Bloomberg points out.
An analysis of 14 years of market returns across almost 1,900 companies recently revealed that when companies appoint female directors, they experienced two years of stock declines. Companies saw their stock fall by an average of 2.3% just from adding one additional woman to their board.
Kaisa Snellman, an assistant professor of organizational behavior at INSEAD business school and a co-author of the study said: "Shareholders penalize these companies, despite the fact that increased gender diversity doesn't have a material effect on a company's return on assets. Nothing happens to the actual value of the companies. It's just the perceptions that change."
The study suggests that investor biases are to blame. The study asked senior managers with MBAs to read fictional press releases announcing new board members. The statements were identical, but for the gender of the incoming director.Participants said that men were more likely to care about profits and less about social values, while women were deemed to be "softer".
Snellman continued: "If anyone is biased, it is the market. Investors should consider organizations that add women and other under-represented groups to their boards because there's a good chance that company is being undervalued."
Despite this study's findings, other non-academic reports over the years have suggested that diverse leadership results in corporate success. A McKinsey analysis concluded that board diversity correlates with positive financial performance and a 2019 Credit Suisse report noted a "performance premium for board diversity".
These findings have prompted investors like BlackRock to push for diversity on boards. Women now account for more than 25% of board members on the S&P 500 and 20% of boards globally.
(Score: 0, Interesting) by Anonymous Coward on Thursday November 28 2019, @04:37PM (14 children)
Weird, female ceo's earn 75 cents on the dollar so should increase the company price at least by 25%
(Score: 2) by choose another one on Thursday November 28 2019, @04:43PM
Only if the CEO is 100% of total wage bill - i.e. only if a one-person company. They are not usually listed.
(Score: 2) by Runaway1956 on Thursday November 28 2019, @05:16PM (9 children)
Citation needed. Seriously, citation needed. Some fly-by-night small business might be getting by with that nonsense today, and some relatively small corporations. Larger corporations listed on the exchanges are being scrutinized by half a zillion neb-noses. I don't think you'll find many credible citations for that claim that female CEO's only make 75% of what their equally qualified male counterparts are making.
I've mentioned a time or two that I work for an international corporation. There is zero bias in regards to gender, race, sexual preference, or anything else that I can think of. They are biased a little bit against assholes, but, alas, asocial assholes are not a protected class of people. Aside from that, equally qualified people make the same money, all around. (Maybe I should clarify that we're all equally underpaid.)
(Score: 5, Informative) by legont on Thursday November 28 2019, @06:33PM (6 children)
Last week I attended a course sponsored by my company (IT infrastructure related course; large international co). Typically it would cost $1000 per seat per day. It was free for us and yes, useful. There were 50 seats (yes, $50K for the event). Two of them were occupied by females. The promotion later this year will have the exactly opposite statistics.
P.S. The females were young girls - one Chinese and one Indian.
P.P.S. The majority of the males were in their 50s.
So no, there is no equality right now - not even close. One day we will pay for it; dearly.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 5, Insightful) by Anonymous Coward on Thursday November 28 2019, @07:49PM (2 children)
Equality is an annoying word when used as a general descriptor, because it can mean two radically different things:
- Equality of results = you'd have equal genital distribution, equal skin color distribution, equal sexuality distribution, equal weight distribtuion, equal height distribution, equal name length [linkedin.com] distribution, equal weight distributions, so forth and so on with an ever expanding number of categories you need to shoehorn in, equally.
- Equality of opportunity = the 50 people most deserving of the seats would be there.
In my opinion the former is dystopic. The main reason is that it's based on a flawed assumption. It assumes that every imaginable group has a roughly comparable distribution of abilities, and so outcomes are driven primarily by environmental factors. Any difference thus must be because of some form of bias or discrimination. This is contradicted by extensive evidence. Key characteristics such as general intelligence are not only highly heritable but geneticists have now [nature.com] even pinned down certain sequences which can offer predictive expectations of a sizable chunk of the entire intelligence differences between individuals.
In other words, given a sample of two individual's saliva, we're already at the point that we can determine, well beyond randomness, whom will perform better on cognitive assessments of any sort. This makes people extremely uncomfortable for very obvious reasons - nobody wants to imagine they might have drawn the short straw, and nobody wants to inspire Hitler 2.0. Nonetheless, denying reality because it's uncomfortable is hardly a productive idea.
This does not mean that I would not support encouraging whatever group you happen to have a preference for to participate. But, what happens if, even after extensive encouragement, you're still not hitting the numbers you want? This doesn't necessarily mean there's a problem or that you're even doing anything wrong. It may simply indicate underlying differences and preferences. And at the point you simply start ignoring the numbers in pursuit of checkboxes, that is the point at which you will end up paying for your mistakes; dearly.
(Score: 2) by barbara hudson on Thursday November 28 2019, @08:41PM
Equal genital distribution? Sounds painful, unless you're exempt because you're already a hermaphrodite.
Though you could probably make money off it. They stream all sorts of shit nowadays.
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(Score: 3, Interesting) by Immerman on Friday November 29 2019, @05:06AM
I agree - equality of opportunity is what we should strive for.
And intelligence is indeed heritable - but aside from the Ashkenazi Jews and a few other small populations, there hasn't been any credible correlation between intelligence and race, once you correct for differences in economic status and the associated developmental impairments. Which is to say that, on average, a white man and a black man who were equally well fed and educated as children, will show equal intelligence as adults. Same thing with women and men.
And without a genetic basis for racial biases, statistical distribution at population scales would ensure that your "equality of opportunity" would deliver something very close to your "equality of results". The fact that we *don't* see "equality of results" is thus a strong indicator that we don't actually have "equality of opportunity"
(Score: 1, Flamebait) by Ethanol-fueled on Thursday November 28 2019, @09:20PM (2 children)
A few months ago the corporate board came by for a visit. In a group of around 20 people, only one was a lady and who knew if she was actually serving her purpose. Being well-mannered, I told them all on their way out, "Good afternoon, gentlemen," while the lone woman added, "...And Lady!" as I apologized red-faced.
Speaking of such, the utopian state of California signed a bill [natlawreview.com] to encourage corporations to add more females to their ranks. Here's the details:
But will somebody think of the trannies? Just imagine if you were a bunch of totally hetero dudebros and didn't want any females on your board. You could hire a tranny identifying as female, or you could have one of your dudebro board members identify as female and "take one for the team" showing up to meetings in a padded bra, jacket-and-skirt, and wig with some lipstick to taste. Maybe even some nice panties, if they're the silk kind.
(Score: 2, Informative) by Anonymous Coward on Thursday November 28 2019, @10:09PM
Prop 47, decriminalization of HIV infection and public defecation have to be tolerated so the state can focus on serious crimes like not enacting Stalinesque diversity quotas. Commiefornia yes!
(Score: 2) by driverless on Friday November 29 2019, @07:40AM
You've also got to read the rest of the linked article, while the thought behind it is good, simply saying "50% (or whatever) of your board must have girly bits" is unworkable both in practice - what if you genuinely try to find female directors but just can't because there aren't many around in your industry - and legally, see the article. It's overbroad and leaves way too many details unspecified, again see the article. So it'll end up tied up in legal action for years to come.
(Score: 2, Funny) by Anonymous Coward on Thursday November 28 2019, @09:16PM
"They are biased a little bit against assholes, but, alas, asocial assholes are not a protected class of people."
So, they fired you, huh?
(Score: 0) by Anonymous Coward on Friday November 29 2019, @07:16AM
In other news, adding a single Runaway1956 to a Board of Directors reduces stock valuation by nearly 110%. There is a very strong, 1:1 correlation on this one. All the data confirms it.
(Score: 2) by legont on Thursday November 28 2019, @06:18PM (1 child)
Perhaps, the pay simply reflects the stock performance as it is supposed to be by the current theory; right or wrong.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 0) by Anonymous Coward on Friday November 29 2019, @06:09AM
"Perhaps, the pay simply reflects the stock performance as it is supposed to be by the current theory; right or wrong."
When have you ever noticed CEO pay correlate with stock performance? I'm not going to bother looking up a link for you but there is some evidence that CEO pay and performance are actually anti-correlated.
(Score: 0) by Anonymous Coward on Thursday November 28 2019, @08:13PM
CEOs aren't necessarily board members. The board of directors hires the CEO. Start-ups and other companies where the founder(s) are still involved have better odds of a board member being the CEO, but it's not guaranteed.