The study was conducted between 1998 and 2011 and lead by two female researchers Isabelle Solal and Kaisa Snellman, who are organisational behavioural experts.
Can the stock decline be directly related to the hiring of women? Is the stock market’s negative reaction directly linked to increases in board diversity? It’s well established that board diversity correlates with positive financial performance.
But apparently investors in the stock market don’t share this view. Kaisa Snellman, an assistant professor of organizational behavior at INSEAD business school and a co-author of the study said, “Shareholders penalize these companies, despite the fact that increased gender diversity doesn’t have a material effect on a company’s return on assets.”
“’Nothing happens to the actual value of the companies,’ she said. ‘It’s just the perceptions that change.”
This internalised gender bias was demonstrated when researchers asked senior managers to read fictionalised press releases announcing new board members.
“The statements were identical, except for the gender of the incoming director. Participants rated those hiring men as more likely to care about profits and less about social values and those hiring women as ‘softer’,” Snellman said.
Clearly, people still perceive men and women differently; apparently, a man is more interested in maximising shareholder value, whereas a woman is more interested in ethical issues.
Last week, research from Canada, where women make up 20 per cent of board members in the top 500 companies, revealed that almost two-thirds of working women claim gender discrimination is the main reason for lack of female executives, compared to 41 per cent of working men.
But as the Harvard Business Review showed last month, the progressive work being done by machine learning teams are now increasingly sensitive to gender bias in AI and working to counter this with explicit practices.
As of last month in the U.K, only 4% of chief executives and 7% of chairs were female. In Australia, as reported in October from the Australian Institute of Company Directors’ showed that women make up 29.5 per cent of directors on the ASX 200 boards. Globally, women now make up more than a quarter of directors on the S&P 500 and 20% of boards.
Is diversity a source of value creation? It is, once we shift our unconscious biases about what a woman priorities and what a man priorities.
As the Insead research report authors Isabelle Solal and Kaisa Snellman said, “Women bring new insights and perspectives and increase the cognitive diversity of the board. The greater the cognitive diversity, the better the board is at solving complex problems and coming up with novel solutions.”