Terry Smith, a man who attracts trouble like iron filings to a magnet, is at it again. He’s found a study on the emotional issue of women on boards. Its conclusions are manna from heaven for beleaguered all-male boards. Here it is:

In 2003, a new law required that 40 percent of Norwegian firms’ directors be women – at the time only
nine percent of directors were women. We use the pre-quota cross-sectional variation in female board
representation to instrument for exogenous changes to corporate boards following the quota. We find that
the constraint imposed by the quota caused a significant drop in the stock price at the announcement of
the law and a large decline in Tobin’s Q over the following years, consistent with the idea that firms choose
boards to maximize value. The quota led to younger and less experienced boards, increases in leverage and
acquisitions, and deterioration in operating performance, consistent with less capable boards.

Ouch.

 

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