University of Michigan study on the impact of quotas on Norwegian businesses

The University of Michigan (and more specifically its Ross School of Business) was the source of a paper that continues to generate much interest in the ‘gender balance in the boardroom’ debate. Proponents of ‘improved’ gender diversity in boardrooms have long claimed a positive causal relationship between increasing female representation on boards and increasing corporate performance. A paper published by Professor Amy Dittmar and Professor Ken Ahern of the UoM Ross School of Business shows conclusively that in Norway the increased female representation on company boards (forced by legislation) had a causal effect on corporate performance, but the effect was a NEGATIVE one. Still, I don’t expect that proponents of ‘improved’ gender diversity will trouble themselves over such facts (they rarely do). For the umpteenth time I invite anyone with any evidence of a positive causal link between increased female representation on boards, and enhanced corporate performance, to send it to me. I’ve been searching for the evidence for years, and nobody seems able to provide any. We all know why, don’t we?

Many Norwegian companies delisted rather than expose themselves to the quota legislation, and not even one company has since relisted.

The report’s full Abstract:

In 2003, a new law required that 40 percent of Norwegian firms’ directors be women – at the time only nine percent of directors were women. We use the pre-quota cross-sectional variation in female board representation to instrument for exogenous changes to corporate boards following the quota. We find that the constraint imposed by the quota caused a significant drop in the stock price at the announcement of the law and a large decline in Tobin’s Q over the following years, consistent with the idea that firms choose boards to maximize value. The quota led to younger and less experienced boards, increases in leverage and acquisitions, and deterioration in operating performance, consistent with less capable boards.

The report is now in print in The Quarterly Journal of Economics, 2012, vol. 127(1): 137-197.   You can also access the article at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470

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About Mike Buchanan

I'm a men's human rights advocate, writer, and publisher. My primary focus is leading the political party I launched in 2013, Justice for Men & Boys (and the women who love them). I still work actively on two campaigns I launched in early 2012, Campaign for Merit in Business and the Anti-Feminism League. In 2014 I launched The Alternative Sexism Project, aiming to raise public understanding that the sexism faced by men and boys has far more grievous consequences than the sexism faced by women and girls.
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One Response to University of Michigan study on the impact of quotas on Norwegian businesses

  1. Pingback: Quotum doorbreekt hegemonie van mannen aan de top | blankemannenbolwerk

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