Do women on the board bring a special style?

There has long been a presumption that companies with greater female leadership might grow to perform differently from those led by men. Since 2006, Norway has provided the world with a sort of natural experiment. It introduced a quota requiring that the boards of directors of public companies be composed of at least 40 per cent female members, and since then it's been the focus of attention of governments around Europe and elsewhere as a model for possible. The role of women directors has been the subject of much academic interest, too. One study of US companies showed a clear difference in approach, with the rather startling finding that boards with a large number of women were rather better at monitoring management but rather less good at generating profits. Another on a similar dataset found, however, that having women on the board didn't make the company more risk averse.

The Norwegian case, however, gives us a chance to examine such issues without some of the sources of error that arise from certain companies or industries being more open to women. Researchers from Northwestern University in Chicago and the University of Virginia ran their calculators over some of the early data from Norway's experiment and found something of a stakeholder orientation among companies affected by the quotas. They increased labour costs and employment levels at the cost of short-term profits. The effects were strongest among firms that had no female board members before the quota was introduced, and therefore may have experienced a sort of culture shock in the boardroom. "The results are consistent with changes in board composition affecting corporate governance and strategy, and with prior research suggesting that female managers may be more stakeholder-oriented than men," they conclude.

Source document: The working paper "A Female Style in Corporate Leadership? Evidence from Quotas," by David Matsa of
Northwestern University and Amalia Miller of the University of Virginia, is a 40-page pdf file.