Increasing female representation on boards leads to corporate financial decline – the evidence

The government is bullying FTSE100 companies into appointing more female directors to their boards, by threatening legislated gender quotas if the companies haven’t ‘voluntarily’ achieved 25% female representation on their boards by 2015. The government’s longer term objective is 50% female representation on FTSE350 company boards, and it won’t stop there. Ever smaller companies will be affected over time.

So what’s known about the impact of increasing female representation on boards? Our associated organisation Campaign for Merit in Business – C4MB – points to five longitudinal studies which show that increasing female representation on boards leads to declines in corporate financial performance. The studies are referred to in a number of their posts, and have been included in a number of their documents. The C4MB briefing paper with the studies’ full Abstracts, along with links to the original studies, can be found here.

Mike Buchanan, the leader of C4MB, gave oral and written evidence to House of Commons and House of Lords inquiries, presenting these studies. Not one MP or peer challenged the evidence, nor presented any evidence of a positive impact of increasing female representation on boards – hardly surprising, since no evidence of the latter exists – yet the policy direction remains unchanged. It’s nothing less than an attack on a cornerstone of capitalism – the freedom of companies to appoint directors as they see fit.

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