Investors Penalize Companies for Adding Women to Their Boards
Researchers find that shareholder bias toward female directors is at play.
This article is for subscribers only.
Many of the biggest companies have wholeheartedly embraced the theory that more diversity means more profits. Investors may be less convinced—at least when it comes to adding women to boards.
An analysis of 14 years of market returns across about 1,889 companies finds that when they appointed female directors, they experienced two years of stock declines. The market value of a given company fell 2.3% by adding one additional woman. The research was published in the Informs journal Organization Science.