In an unhappy moment for the politically correct, the academics claim that their research shows that having more women in the boardroom can have “a negative effect on financial performance”.
While companies with more women on their boards tend to have better corporate governance, they are less profitable and have a smaller market capitalisation, according to the paper.
Dr Daniel Ferreira, from LSE’s Department of Management said: “This is a complicated picture. Our research shows that women directors are doing their jobs very well. But a tough board, with more monitoring, may not always be a good thing. Indeed, we see that increased monitoring can be counter-productive in well-governed companies.”
The research comes just days after, Harriet Harman, Labour’s deputy leader, repeated a quote about “Lehman Sisters, not Lehman Brothers” to warn that the lack of women in senior business roles was one of the reasons for the financial crisis.
Miss Harman, who is standing in for the Prime Minister while he is on holiday, wasn’t available for comment yesterday.
The research, published in the Journal of Financial Economics, suggested that female directors have a better attendance record at board meetings than their male peers. It also said that boards with more women tend to be more ruthless in getting rid of badly performing chief executives.
“The message is not that we need less women on boards,” Dr Ferreira said. “A board is not, after all, exclusively directed towards profit. However, we can see that when you meddle with boards there may be unintended consequences. This is important to bear in mind in the current context when companies are under increasing pressure to change the composition of their boards.”
Karren Brady, pictured above, who became the Managing Director of Birmingham City FC at 23 and is now a director of Mothercare and Channel 4 disagrees with this report and says that every company needs ‘a fit and appropriate balance’ in its management structure to really succeed.
