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February 13, 2020 Thursday 04:26:50 PM IST

Gender-diverse corporate boards reduce financial misconduct

Leadership Instincts

A new study by the University of Toronto, of more than 6,000 U.S.-listed companies found that firms with a mix of women and men on their boards outperformed those where boards had no women or only one, with fewer financial reporting restatements and a lower incidence of fraud. Diversity was key. The improvements levelled out once boards approached gender parity. That suggests the difference may come from a broadening of perspectives around the board table and not because women brought superior skills or other characteristics, said the study. The benefits of more women continued to increase up to about three female directors before starting to diminish, with an average total board size of about nine directors.

Only about 20 companies, mostly in apparel or cosmetics, had boards with a majority of female directors at any time during the decade, according to the research. The percentage of firms with at least one female director dropped during the period, from 56 per cent to 54 per cent. The percentage of women on boards that had any women increased from 7.6 per cent to 9.1 per cent.

(Content Courtesy: https://www.utoronto.ca/news/gender-diverse-corporate-boards-reduce-financial-misconduct-u-t-study) 


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