On behalf of Campaign for Merit in Business I recently sent a written submission to the DBIS inquiry on corporate governance, and I have yet to learn if I’m going to be asked to give oral evidence, as I did to a previous inquiry in 2012. I hope so, as I believe I’d be the only person to point out that the entire ‘business case’ for higher female representation on boards is based upon the false premise that appointing more women to boards will lead to enhanced financial performance, while the evidence clearly demonstrates a causal link with corporate performance decline.
But that doesn’t stop the proponents of ‘more women on boards’ from relentlessly lying (or implying) a supposed business case. The list of written submissions to the DBIS inquiry is here. One is from the odious 30% club, who cite a number of studies and reports in support of their contention that more women on boards leads to improved financial performance. The most recent is from the Credit Suisse Research Institute, September 2016, the 51-page-long The CS Gender 3000: The Reward for Change. The second page starts with this:
Gender diversity is an important element of corporate performance and talent management efforts. In its second, updated report the Credit Suisse Research Institute reconfirms the clear link [my emphasis] between diversity and improved business performance.
The begged question, of course, is whether the clear link is a causal link, or meaningless correlation.
On p.25 a section starts, with the title, ‘Does greater female participation make for greater impact?’ We find this in the second paragraph on p.27:
Lower leverage, higher payouts and higher return on capital employed lend support to the idea that diversity implies better returns for lower risk. In addition, our HOLT analysis shows that companies with a number of female top managers hold meaningfully lower excess cash on their balance sheets. Figure 29 again shows a linear relationship as we see for the dividend payout ratio, 15% lower for companies with 25% women, 18% for those with 33% and 26% for those with 50%. While we still do not argue causality, [my emphasis] there is a consistency in our findings that demonstrates that greater gender diversity at senior levels leads to [my emphasis] greater returns for a company…
So the report doesn’t ‘argue causality’ then goes on to… er… argue causality. It’s enough to drive a man mad…
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