4 ms·

One possible explanation: Companies which are under pressure to diversify their boards select people who are less competant/experienced.

• limist 17y ago
  Assuming that's true, why is there a shortage of skilled women directors? This result would be unsurprising in, say, the 1970's, but in 2009, it is somewhat mystifying, though perhaps the median age of corporate directors is still high enough that an older generation is the norm, before many women enrolled in MBA programs or had lengthy corporate careers.
  • mediaman 17y ago
    I think you nailed it there: the median age is still high. Also consider that the gender gap will likely not disappear for a long time, if ever. Many extremely smart, well-educated women leave the workforce for a period of time because they place the opportunity of raising one or more children above the opportunity to use their skill to continue the corporate war to the top. All else being equal, someone who leaves for a number of years before returning will have a tougher time making it to the top than someone who does not leave. This could partly explain why although there are more women graduating with undergraduate degrees than men, roughly one third of MBA students are women. It will be interesting to see what ratio the senior execs drift toward as institutional sexism begins fading with older generations. Probably not 50:50, but maybe closer to what's seen at MBA schools.
    • lallysingh 17y ago
      A compensating factor could be the increasing percentage of women in college. http://www.prb.org/Articles/2007/CrossoverinFemaleMaleCollegeEnrollmentRates.aspx http://www.prb.org/Articles/2007/CrossoverinFemaleMaleColleg...
• kscaldef 17y ago
  The article itself contradicts that explanation: "women were more effective at tasks such as executive supervision and monitoring", "Female directors also had a better record of attending board meetings", "Our research shows that women directors are doing their jobs very well". In fact, they also say that female directors were a benefit to "poorly-managed" companies. So, one thing you might claim is that this fits in with the general theory that the performance of men has a higher standard deviation than the performance of women.
  • absconditus 17y ago
    Perhaps better "executive supervision and monitoring" is not desirable.
    • anigbrowl 17y ago
      Not if you're the executive in question. Shareholders might feel differently about this :)
    • DaniFong 17y ago
      Perhaps more closely 'executive supervision and monitoring is undesirable when the monitoring is done by people bound from the top, such as shareholders on boards, or top executives on underlings.' From the abstract: "This negative effect is driven by companies with greater shareholder rights. In firms with weaker shareholder rights, gender diversity has positive effects."
  • timwiseman 17y ago
    Yet while those traits often helped badly governed companies, the Ferreira and Adams study suggests that increased monitoring can have a negative effect on well-governed businesses. That seems to be the key sentence. Although I am not certain, it seems likely that it is board interference with already effective management, not the presence of woman, that forms the causal link here.
  • neilk 17y ago
    Assuming that this study is well run and this popular article isn't oversimplifying... which are very big ifs... some other ideas: - Companies in trouble might turn to women as board members. Women executives are still mostly outsiders. They might be more likely to join (or be solicited to join) the board of a company doing poorly. - It's pretty well established that men are more comfortable with high risk -- sometimes to their detriment. Perhaps those companies with more female board members are less profitable but they go bankrupt less often. - It might be that companies start thinking about board diversity once they've plateaued.
• anigbrowl 17y ago
  Another possibility: companies with more women on the board manage their risk more effectively, sacrificing some short-term profit for long-term stability. Really, I couldn't decide from the article, but we've seen q good number of big companies recently that looked quite profitable until they went spectacularly bust.
• mynameishere 17y ago
  Any manipulation with have this effect. If the government said, "You must hire people who prefer strawberry ice cream over chocolate ice cream", even though there is likely near-absolute equality between those two groups, companies will still be damaged by a reduction in their ability to hire freely.
  • thras 17y ago
    And it will be even worse if there isn't any near-absolute equality between two distinct groups, which tends to be the case in most real-world government preference scenarios.
    • mynameishere 17y ago
      I guess I implied that that was true, but also not necessary.