The Jan. 17, 2022, issue of Bloomberg Businessweek featured “The year ahead, 2022.” It seemed a few weeks late for such an ambitious venture, but I enjoyed its review of the many open questions in our economy.
The last major section of the magazine was devoted to “50 companies to watch.” The choices were based on anticipated stock price movements, up or down.
There were many foreign companies from Abrdn (formerly Standard Life Aberdeen) to Willis Towers Watson. Likewise there were very familiar firms from Airbnb, Alphabet (Google),Coca-Cola, Netflix to Volkswagen.
Six items of information accompanied text on each firm. I understood the reason for most of the information — Market capitalization, 3-year annualized total return, 12 months of sales, and the 2020 sales growth rate.
However, why did Businessweek publish the female percent of board membership and the gender of the CEO? Why not the number of employees, the median wage, or other indicators of corporate reality? The questions did not stop there.
Is the gender composition of the Board of Directors and that of the Chief Executive Officer now an investment factor? Will the speed at which General Motors moves toward an electric fleet be influenced by having a woman as CEO and a board that is 54.5% female? Was the extraordinary 3-year total return (93%) of Australia’s Fortescue Metals Group a consequence of a female CEO working with a board that has 44.4% female membership?
Should we believe a board with 85.7% women and a male CEO brought about a decline of 27.9% in 2020 sales for Victoria’s Secret? Or was that setback brought about by the Covid pandemic?
Does the presence or absence of women in the governing body of a contemporary corporation make a difference in the fortunes of a firm? According to a review of the evidence as of 2017 by Katherine Klein, Wharton School management professor,
“the presence of more female board members does not much improve — or worsen — a firm’s performance.”
However, there are many dimensions of performance beyond standard accounting statements. If women, or other excluded groups, offer a diversity of experience, attitude, and judgement, the effects might be seen in corporate lobbying behavior, charitable giving, employee recruiting and retainment.
Studies of recent corporate behavior with regard to the Covid pandemic have yet to be published. Were boards with women more attentive to health and family concerns of employees? Did such boards make temporary or permanent policy changes relative those concerns?
It is likely women selected for corporate boards are not much different from the men already sitting on those boards. Hence, we would not expect noticeable changes in corporate metrics. But that is not a reason for limiting the opportunity for women to join the club or to use the executive spittoon.