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Econoblog

Discussion and analysis of the latest economic issues.

By Sean O'Grady, Economics Editor of The Independent.

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Gender balance can be bad for profits

Posted by Sean O'Grady
  • Thursday, 6 August 2009 at 11:43 am
Sorry, girls. Harriet Harman, or Harriet Harperson as she is sometimes unkindly known, says that businesses would be better run with more females in the boardroom. You might think there is something in that - but it doesn’t stack up against hard social scientific research. Having more women in the boardroom improves a company’s governance but can actually have a negative effect on its bottom line, according to the latest research from the academics.

The London School of Economics’ expert Dr Daniel Ferreira and Professor Renée Adams from the University of Queensland looked at how the behaviour of boards change when there are more women on them. They found boards with more women are more effective when looking at measures such as the monitoring of chief executive, for example, being more likely to be replaced for poor share price performance. Female directors have a better record of attending board meetings.

However the researchers also found that, on average, firms with proportionally more women on their boards are less profitable and have a lower market value. This suggests that in well-governed companies increased monitoring could have a negative effect. In contrast, badly governed companies were found to benefit from having more women on their boards. So gender balance can be bad for profits. Someone should tell Harriet. After all, our banks really do need to start making some money.

Comments

Badly governed
schizo_stroller wrote:
Thursday, 6 August 2009 at 11:45 am (UTC)
Econoblog stated: So gender balance can be bad for profits

previously he had stated:badly governed companies were found to benefit from having more women on their boards

He concluded: Someone should tell Harriet. After all, our banks really do need to start making some money.

To which earlier statement were you referring in your conclusion?
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