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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: 2) by FatPhil on Friday November 29 2019, @02:15AM (4 children)
The "true" value being the cheapest value possible that an apple can be sold for while still providing a profit to its seller.
The price of an apple has nothing to do with what 'the market's controllers tell it to value' - it has everything to do with how cheap you can produce an apple and sell it!
"""
Why do I need to debunk this trope every time there's a story about 'markets'? The above is a pure fiction unsupportable by neither mathematical theory (read some Patero, you're a few hundred years behind the times), nor practice (not that a well-functioning market is easily found).
It is just as true (and equally, just as false) to say that in a well functioning market, the price of a good or service will be maximised, as there's no asymmetry between the resources being exchanged.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by aristarchus on Friday November 29 2019, @07:29AM (3 children)
FTFY, no thanks necessary.
(Score: 2) by FatPhil on Friday November 29 2019, @12:07PM (2 children)
I did notice it after posting, but couldn't be arsed to follow up to myself as anyone whose only comeback is a typo snark has nothing of value to contribute, and I don't mind them outing themselves as such.
Expect typos in this too - this shitty PC keyboard has a habit of dropping 2 or 3 consecutive characters, and having unpredictable rollover behaviour.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by aristarchus on Friday November 29 2019, @08:03PM (1 child)
Good, Phil! I was worried about you.
(Score: 2) by FatPhil on Saturday November 30 2019, @08:41AM
Know any cures for insomnia?
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves