Saturday 17 June 2017

Diversity in the metastudy

Wharton's Katherine Klein has a nice literature review up on the effects of corporate boardroom gender diversity.

The bottom line seems to be no effect.

Klein usefully contrasts consultancy reports on the topic with the findings of the academic literature:
Do companies with women on the board perform better than companies whose boards are all-male? Many popular press articles and fund managers make this claim, citing studies by consulting firms, information providers and financial institutions, such as McKinsey, Thomson Reuters and Credit Suisse.

Writing recently on Huffington Post, for example, one consultant observed the following:
“Companies with gender-diverse management teams have been proven to consistently perform better and be more profitable than those without them. There is overwhelming evidence to support the value of having more women in senior leadership positions. A growing body of research –including studies by McKinsey & Company — has proven that companies with more women in senior executive and board roles have advantages over those that don’t.”
But research conducted by consulting firms and financial institutions is not as rigorous as peer-reviewed academic research. Here, I dig into the findings of rigorous, peer-reviewed studies of the relationship between board gender diversity and company performance.

Spoiler alert: Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all.
That's consistent with my read of things as well. But be careful here too: there being no relationship doesn't mean that quotas or mandates would be costless. You'd need to specifically sort through the studies that looked at effects of quotas, because changes in board composition that are board initiated might differ from ones that are compulsory.

Previously: Wishful Treasury Thinking

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