No quotas for women on corporate boards

Although women moved ___ the workforce ___ great numbers ___ the 1980s, they still have to catch ___ to

men ___ terms ___ leadership positions ___ corporate America. The New York human resources firm

Catalyst found that women hold 16.9 percent ___ officer positions ___ American corporations, and only 11

percent ___ senior leadership line roles.

The question is, why are there so few women corporate board members? Those who have a proclivity to

assume sex discrimination might fear the worst. Others might simply assume that relatively few qualified

women were available ___ board slots, or that boards ___ women performed poorly ___ the marketplace.

Earlier this month the London School of Economics released a new study showing that publicly-traded

companies ___ more women ___ the boards ___ directors do better ___ terms ___ firm management but

worse ___ terms ___ economic performance. The study, entitled Women in the Boardroom and Their Impact

on Governance and Performance, was just published ___ the Journal of Financial Economics.

The authors, economists Renee Adams of the University of Queensland, Australia, and Daniel Ferreira, of

the London School of Economics, conclude that additional women improve the governance ___ the firm.

Female board members were more likely to be assigned ___ audit, nominating, and corporate governance

committees and they had higher attendance ___ board meetings. Chief executive officers ___ companies

___ female directors are held to a higher standard ___ accountability.

Surprisingly, the authors claim to have statistical results that reveal precisely this politically incorrect result:

firms with women ___ board have lower return ___ assets than firms ___ women board members. The firms

are less profitable and have lower financial performance.

The authors used data ___ 1996 ___ 2003. The sample contained data ___ 1,939 firms and, within these,

86,714 directorships.

___ average, these firms had slightly more than 9 board members each, but 39 percent ___ the annual

observations are firms ___ no women. Moreover, 40 percent of observations were firms ___ only one woman

___ the board. Thus, fully 79 percent ___ the observations are firms ___ boards with either one or no women

___ the board. ___ average, fewer than 10 percent ___ all directors are women.

Professor Ferreira explained his results this way ___ a press release issued ___ LSE, ”Our research shows

that women directors are doing their jobs very well. But a tough board, ___ more monitoring, may not always

be a good thing. Indeed we see that increased monitoring can be counter-productive ___ well-governed

companies.”

He continued, “When you meddle ___ boards there may be unintended consequences. This is particularly

important to bear ___ mind ___ the current context when companies are ___ increasing pressure to change

the composition ___ their boards.”

As the global economy struggles to recover ___ the recession, this conclusion is worth bearing ___ mind.

Women will only be harmed if it is perceived that they have gained their directorships ___ a system ___

quotas. Rather, they need to make sure that they put ___ the hours ___ work and go for the tough

negotiating strategy so that they move ___ the top ___ their own and gain board seats ___ their own merit.