Firms blame female board for scrips' fall

Bourse blues


Research work carried out by the University of Exeter suggests that shareholders react negatively to women being appointed to companies’ boards and are “unenthusiastic” about females cornering senior positions.

“Companies with female board members fare worse on the stock market, despite performing as well on all other measures as those with all-male boards,” the University said. The findings are from a team of the University of Exeter’s School of Psychology and Business School, which conducted a comprehensive analysis of performance data from all FTSE 100 companies between 2001 and 2005.

“... companies with all-male boards had a market valuation equivalent to 166 per cent of their book value, while companies with at least one female board member had a market value equal to just 121 per cent of book value,” the University said in a statement.

Better investment

However, the findings published in the British Journal of Management noted that appointing a woman to a firm’s board does not compromise objective measures of financial performance such as ‘Return on Assets’ and ‘Return on Equity’.  “In fact, within the data set as a whole there was evidence that companies with women on their board were far better investment than those without,” it said.

Moreover, shareholders seem to systematically “over-value” companies with all-male boards and unenthusiastic about women getting appointed to senior positions.
Such a scenario emerges despite there being no evidence that women’s appointment has an adverse impact on the firm’s performance.

Alex Haslam, the leader author and a psychologist at the University of Exeter, said the study shows shareholders tend to devalue companies with women board members and chronically over-value those with all-male boards.

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