Daily Share: More Women on Corporate Boards Means Fewer Risky Mergers, Study Says
This week, The Washington Post published an article about women in executive corporate positions. Business may not interest you much, but this particular study should.
Researchers at the University of Notre Dame found that businesses with more women in corporate executive positions created fewer mergers. This may sound like it is bad for business, but considering that around half of business mergers fail, it’s a sign that diversity leads to smarter, more efficient business practices.
It was also found that water is fucking wet.
According to WaPo, “Firms that increased the number of female directors from zero to two gobbled up fewer companies. After a year, their acquisition rate dipped by an average of 18 percent, according to the study. Spending on mergers and acquisitions also fell by an average of $97.2 million. Typical acquisition size dropped 12 percent.”
We can think of these results in two ways: either women offer a gentler side to business (yeah, right) or they have knocked some sense into the white-male-dominated boardrooms. That being said, there is not enough data to show whether only women have this effect, or if there are similar results when the C-suites are more racially diverse.
When decisions are made by people of different backgrounds, folks actually discuss the repercussions of what they are doing rather than just patting one another on the back.
It goes a bit deeper than that, suggests Craig Crossland, a business professor at the University of Notre Dame who led the study:
“Having more women on the board changes the dynamic of the board’s interactions,” Crossland said. “You probably have more comprehensive, thorough and probably contentious discussions. You’re more likely to have a discussion about the challenges, the things that could go wrong.”
Aaron Dhir, of Osgoode Hall Law School of York University and Yale University, wrote a book on Norway’s practices. Norway requires that 40 percent of every business board is female.
“The heterogeneity brought about by quotas has enhanced the quality of boardroom deliberations and overall corporate governance,” he wrote. “The directors I interviewed believed that women were more likely than men to thoroughly deliberate and evaluate risks.”
When will the US also adopt these kinds of progressive and very necessary business laws?