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The Research Diversity Experts Don’t Want You to Read

Do women on boards make a difference to stock performance? One academic says maybe not.

  • Imogen Rose-Smith

Companies and their stake holders are increasingly anxious to add more women to their boards, a process that can be fraught with controversy, as the troubles in ride-hailing app Uber’s boardroom this week demonstrate. But for all the hand-wringing, a recently published overview of peer-reviewed studies measuring the performance of companies with female board members finds that companies do not perform any better — or any worse — when they have women on their boards.

Katherine Klein, a management professor at the Wharton School at the University of Pennsylvania and the school’s vice-dean for social impact, examined two recently published meta-studies that compare the findings of hundreds of peer-reviewed academic research studies exploring the topic of gender diversity on corporate boards and corporate performance.

“The results of these two meta-analyses, summarizing numerous rigorous, original peer-reviewed studies, suggest that the relationship between board gender diversity and company performance is either non-exist (effectively zero) or very weakly positive,” writes Klein in her review of the research, published last month on Knowledge@Wharton, the school’s online business journal. “Further, there is no evidence available to suggest that the addition, or presence, of women on the board actually causes a change in company performance.”

Public pension plans including the $206.5 billion Californian State Teachers Retirement System have long been advocates of greater women and minority representation on corporate boards. And while Klein’s research might at first blush seem to undermine the oft-stated assumption — that boards with more diverse perspectives do a better job of overseeing companies — it is not a wholesale repudiation of the work of diversity advocates.

Klein herself points out that companies with more women do not underperform. There are also plenty of underlying reasons why the data might be what it is. For example, Klein suggests that maybe the types of women who make it onto the boards of top corporations are not themselves that different in outlook and experience from their male counterparts.

The issue of increased media representation on boards made headlines again this week. San Francisco-based Uber, valued at $68 billion, has been struggling to address its problems with women, including allegations of sexual harassment, discrimination, and inappropriate behavior in its ranks. Uber board member Arianna Huffington, a woman, has been charged with the task of co-leading an investigation into the startup company’s corporate culture.

At a staff meeting this Tuesday to discuss the findings — which was recorded and subsequently obtained by Yahoo Finance — Huffington mentioned that Uber is adding a new woman board member, Wan Ling Martello, and added, “There’s a lot of data that shows when there’s one woman on the board, it’s much more likely that there will be a second woman on the board.”

Another Uber board member David Bonderman, CEO of private equity firm TCW, responds with a remark that “actually what it shows is it’s much likely to be more talking.” Bonderman’s quip was widely perceived as being sexist, and within 24 hours of the audio leak, Bonderman had submitted his resignation from Uber’s board.

Uber’s struggles this week, serve to illustrate why women — as well as people from different ethnic and sociological backgrounds — are valuable on corporate boards and in the C-suite, as women make up more than 50 percent of the work force and consumers.

American companies still have a long way to go to reach true equality, diversity experts say, and the problem won’t be easily solved by adding a few women to corporate boards. But if the research shows that companies do not stand to gain financially simply by diversifying their boards, then diversity advocates may need to make their case in more sophisticated and nuanced ways.