A fifth study linking more women on boards to a decline in corporate performance

Regular visitors to this blog will be aware that we’ve already provided links to four robust studies concerning decline in corporate performance following the appointment of more women onto boards. Perhaps the best-known is the Ahern/Dittmar study on the negative impact of legislated quotas on the performance of Norwegian publicly-listed companies. Proponents of ‘improved’ gender diversity on boards have failed to cite even one paper with such robust evidence to support their position.

I’ve just learnt of another academic paper on the Norwegian social engineering experiment, this one written by two American professors, David A Matsa (Northwestern University – Kellogg School of Management), and a professor of the female persuasion, Amalia R Miller (University of Virginia). The paper’s title is ‘A Female Style in Corporate Leadership? Evidence from Quotas’, and it was published in 2011. The  full Abstract:

This paper studies the impact of gender quotas for corporate board seats on corporate policy decisions. We examine the introduction of Norway’s 2006 quota, comparing affected firms to other Scandinavian companies, public and private, that were unaffected by the rule. Based on differences-in-differences and triple-difference models, we find that firms affected by the quota undertook fewer workforce reductions than comparison firms, increasing relative labor costs and employment levels and reducing short-term profits. The effects are strongest among firms that had no female board members before the quota was introduced and present even for boards with older and more experienced members. The boards appear to be affecting corporate strategy in part by selecting like-minded executives.

A link to the study (it’s downloadable at no cost):


The finding that women influence boards to undertake ‘fewer workforce reductions’ will, of course, be welcomed by proponents of Corporate Social Responsibility, or as we term it here at C4MB headquarters, Corporate Social Engineering. What follows from this paper’s findings? It’s simple. Companies which recruit more women onto their boards will be at a competitive disadvantage compared with those which don’t. It’s hardly surprising their financial performance declines, is it? These companies are trying to act like public sector organisations. Hmm… now how might that end up?

I leave you with some immortal words penned by the Nobel Prize-winning economist Milton Friedman 50 years ago. From his book Capitalism and Freedom:

Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.





2 thoughts on “A fifth study linking more women on boards to a decline in corporate performance

  1. A supplementary quote from Milton Friedman, again, directed at Corporate Social Engineering:

    ‘In a free economy … there is one and only one social responsibility of business – to use its resources and to engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud’; Friedman (1996), S.245.

    So, by means of logical deduction one has to conclude that an economy that dictates to firms how they will have to behave and how they will have to assemble their boards cannot be situated in a FREE economy.

  2. Michael, many thanks. Friedman must surely have been horrified by that long gravy train, Corporate Social Engineering. It’s become ever longer and faster over the past 30+ years, but at least the drivers of that train (and many of its passengers) now recognise there’s an organisation intent on laying a concrete block on the track ahead of them. The question is not IF the gravy train will hit that block and be derailed, but WHEN. And after that happy day, what will the thousands of people with job titles which include words such as ‘diversity’, ‘inclusion’ and ‘equality’, DO with their lives? Hopefully something useful to society, by way of a change?

    My warm thanks to the people who are buying ‘The Glass Ceiling Delusion’ in ever-increasing numbers, and for their comments on the book. They’re helping us fund this campaign, which is going from strength to strength.

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