Public companies with more women on their boards are less likely to be hit by scandals such as bribery, fraud or shareholder battles, according to research from index provider MSCI, which looked at more than 6,500 company boards globally.
The research found that boards with gender diversity above and beyond regulatory mandates or market norms had fewer instances of governance-related scandals. “There is a clear pattern between having higher than mandated percentages of women on boards and fewer governance-related controversies,” the report said.
Matt Moscardi, senior analyst at MSCI, said the findings show a board with few or no women should be a red flag to investors “actively looking to limit the possibility of investment capital being subject to fraud or corruption”.
The MSCI research was careful not to draw any conclusions about women’s abilities and characteristics, and instead suggested the number of women on a board should be seen as “a single data point in a matrix of progressive governance indicators”.
Anne Richards, chief investment officer of Aberdeen Asset Management, Europe’s largest listed fund company, said: “It’s not a surprise that more diverse boards have fewer governance issues or scandals. I don’t think this is because women are inherently more ‘moral’ than men. And it’s difficult to tease out cause and effect — Are better companies more likely to embrace diversity or does diverse leadership make for better companies?
“What we can say with certainty is that gender diversity is a good proxy for more general cognitive diversity, and we know that cognitive diversity leads to better problem solving and outcomes.”
Fiona Hathorn, managing director of Women on Boards, a women’s business network, said of the research: “It does not surprise me. A woman often brings to the boardroom different perspectives and insights, because she may well have been brought up in different way to a man.
“As a consequence ... she is likely to ask different questions and hear different things. Research suggests that women do more due diligence, are more reflective and take more measured risk decisions.”