Do Investors Punish Companies With More Female Directors?

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In 2012, Credit Suisse Group published a report on the topic that analyzed the performance of 2,400 corporations between 2005 and 2011. Its conclusion: Those with at least one female board member enjoyed less volatility throughout economic cycles — a feature that was especially pronounced just after the 2008 financial crisis.

Research provider Gallup, consulting firm McKinsey & Co. and research and news outfit Thomson Reuters Corp. have also
released studies that point to the value of gender diversity in the boardroom and within management ranks.

In explaining these results, the reports often highlight the positive effects of diversity on teams. The Gallup report notes
that gender-diverse teams draw from a broader base of industry knowledge, for example. The Credit Suisse study cites findings
from management researchers suggesting that team members are likely to put more effort into preparing for a task that
involves working with a diverse group than they do when collaborating with a homogenous one.

But Harvard University sociology professor Frank Dobbin, who is also interested in how gender diversity might affect company
performance, disputes the seemingly straightforward link between the two. Dobbin modeled and compared the performance, board diversity and institutional investor holdings of 400 U.S. corporations between 1997 and 2006, curious as to how shareholders would react to greater diversity.




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