Are Investors Sexist?

Having women on your board doesn’t hurt your profits, but it apparently hurts your stock.

In terms of a firm’s profitability, appointing women to the board of directors has very little, if any, effect, says Harvard sociologist Frank Dobbin. Yet the same cannot be said of stock value, which tends to decline slightly, according to his forthcoming paper that draws on data from 429 U.S. firms. He attributes it to “unconscious investor bias,” particularly among those with smaller holdings who “likely do not inspect their own motives for buying or selling stock.”
But the consequences of their decisions add up. According to another study published in the British Journal of Management, from 2001 to 2005, FTSE 100 companies with male-only boards were valued at 37% higher than those with women on the board—“a massive number,” says author Alex Haslam.

As a stock-picker, that’s fine by me. It’ll be easier for me to spot undervalued stocks.

Posted by on August 6th, 2010 at 11:09 pm


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