More women on the board reflects a more profitable company, according to one professor at NHH the Norwegian School of Economics.

In research published in the 2013 annual report of the Swedish Corporate Governance Board, Karin Thorburn – who has also taught at Dartmouth College’s Tuck School of Business – says several studies show there is a positive relationship between the fraction of female board members and sales growth, stock returns, and return on equity, assets, and invested capital. “A board does itself a disservice by being too homogeneous,” she says.

And while company profitability cannot be guaranteed by merely adding more women on boards, Prof Thorburn provides examples from Australia, Spain, Singapore and Israel that show this action leads to improved company performance, such as increased shareholder value, more MBA graduates on boards, better attendance at meetings and more diverse skill sets with board members actively seeking more information and taking an initiative.

In Norway, where quotas were introduced in 2006, female board members increased from seven to 43 per cent. Women were hired slightly younger, on average 46 years old versus 50 years old for men, but already had experience in other senior positions, such as chief financial officer or vice president. There was also no shortage in finding the right talent, says Prof Thorburn.

But above all it is the team aspect that stands out, says Prof Thorburn. “It’s important to have one CEO on a board but not everyone needs to be one. Women lacking CEO experience can add other competencies,” she adds.

Just as important, according to the research, there was no negative reaction from the markets to the changes:

If investors expected the quota to reduce firm value, the enactment of the quota would trigger a stock price drop at the Oslo Stock Exchange. Running state of the art asset-pricing regressions, however, we find no significant stock-price reaction to announcement of legislative decisions that led up to the quota. In other words, the market didn’t really care.

While the enforcement of quotas in Norway seemed contentious at the time, it has now, tellingly, become a non-issue says Prof Thorburn: “I think this system has really opened eyes to how many board competent women are out there . . . Now it would be abnormal not to have women in this context, and there’s a critical mass – not just one token woman – which changes the boardroom climate.”

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