Investing with Prejudice: The Relationship between Women's Presence on Company Boards and Objective and Subjective Measures of Company Performance

14 Pages Posted: 17 May 2010

See all articles by S. Alexander Haslam

S. Alexander Haslam

University of Exeter - School of Psychology

Michelle K. Ryan

University of Exeter - School of Psychology

Clara Kulich

University of Geneva; University of Exeter

Grzegorz Trojanowski

University of Exeter Business School

Cate Atkins

University of Exeter

Abstract

This paper presents a comprehensive archival examination of FTSE 100 companies in the period 2001–2005, focusing on the relationship between the presence of women on company boards and both accountancy-based and stock-based measures of company performance. Consistent with work by Adams, Gupta and Leeth this analysis reveals that there was no relationship between women's presence on boards and ‘objective’ accountancy-based measures of performance (return on assets, return on equity). However, consistent with ‘glass cliff’ research there was a negative relationship between women's presence on boards and ‘subjective’ stock-based measures of performance. Companies with male-only boards enjoyed a valuation premium of 37% relative to firms with a woman on their board. Results support claims that women are found on the boards of companies that are perceived to be performing poorly and that their presence on boards can lead to the devaluation of companies by investors. Yet the findings also indicate that perceptions and investment are not aligned with the underlying realities of company performance.

Suggested Citation

Haslam, S. Alexander and Ryan, Michelle K. and Kulich, Clara and Trojanowski, Grzegorz and Atkins, Cate, Investing with Prejudice: The Relationship between Women's Presence on Company Boards and Objective and Subjective Measures of Company Performance. British Journal of Management, Vol. 21, Issue 2, pp. 484-497, June 2010. Available at SSRN: https://ssrn.com/abstract=1605464 or http://dx.doi.org/10.1111/j.1467-8551.2009.00670.x

S. Alexander Haslam (Contact Author)

University of Exeter - School of Psychology ( email )

Exeter EX4 4QX, Devon
United Kingdom

Michelle K. Ryan

University of Exeter - School of Psychology ( email )

Exeter EX4 4QX, Devon
United Kingdom

Clara Kulich

University of Geneva ( email )

Uni Mail - 40 Bd du Pont d'Arve
Genève, Genève CH-1205
Switzerland

HOME PAGE: http://www.unige.ch/fapse/psychosociale/collaborateurs/Kulich/kulichpubli.html

University of Exeter ( email )

Northcote House
The Queen's Drive
Exeter, Devon EX4 4QJ
United Kingdom

Grzegorz Trojanowski

University of Exeter Business School

Xfi Centre for Finance and Investment
Rennes Drive
Exeter, Devon EX4 4ST
United Kingdom

Cate Atkins

University of Exeter ( email )

Northcote House
The Queen's Drive
Exeter, Devon EX4 4QJ
United Kingdom

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