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corporate women

I doubt that having women per se in a business confers any advantage over and above having bright and diligent men and women chosen on the basis of their abilities. How would one test this this? Observational studies would be a start, looking to see whether the proportions of the sexes in different businesses, and at difference status levels in different businesses were related to profitability. The other approach is experimental, in which the proportions of the sexes in groups are systematically varied while the groups are tested on business-relevant tasks.

Credit Suisse (2012, 2014) has done an observational study of 3000 businesses, and find that better financial performance is associated with the proportion of women on Boards and top management teams.

They admit this cannot be considered causal, but of course it might be. Correlation is the way to bet. However, a non-causal association might be that successful companies are able to spend money on public relations, of which appointing a few women to top posts would be part, a cynical measure like giving to selected charities or implementing policies to encourage the recycling of company reports. This criticism could be countered by a longitudinal study at the company level, rather than the cross-sectional approach the authors follow. A longitudinal approach would allow a company to be measured against another company, and against itself at an earlier time, to see whether the number of women leaders made any difference.

Absent a longitudinal study, do the findings of the cross-sectional study allow us to estimate causal effects? Here are some pointers. First, it is the largest companies who have appointed women to top positions. If women were really important for business success, surely this would show from the very beginning, when companies were being formed? Small companies should show the effect most strongly. The large company effect suggests that the cynical interpretation of window dressing might be true.
Second, if women are important for business success, surely this would be evident in the businesses which were innovating, and overturning old established concerns. Women would be providing a fresh approach to management, against which traditional male dominated businesses would flounder.

Market cap and women on board

Third, one needs a measure of survivor bias. Are there any sex differences in the proportion of women in companies which fail? Is there a bias towards companies started by ruthless men who much later employ some top women as window dressing? Conversely, do women start companies which are mostly small and remain small, thus falling below the levels required of Credit Suisse, even though they are profitable?

Credit Suisse say of their company data:

We have created a proprietary database from Credit Suisse’s global company research coverage, amounting to more than 3,000 companies across 40 countries and all major sectors—“The Credit Suisse Gender 3000 (CSG 3000)”. It tracks, by company, industry and region, the gender mix across the key senior management roles of CEO, CFO, Operations and Shared Services.

Greater diversity in boards and management are empirically associated with higher returns on equity, higher price/book valuations and superior stock price performance. However, new findings emerge from this added management analysis – we find no evidence that female led companies reflect greater financial conservatism where leverage is concerned. Also, dividend payout ratios have been shown to be higher. Female CEOs have proven to be less acquisitive than men when assuming the leadership position. The analysis makes no claims to causality though the results are striking.

It is not a case of a greater ability of one gender versus the other but that a more diverse group makes for better decision making and corporate performance.

While our statistical findings suggest that diversity does coincide with better corporate financial performance and higher stock market valuations, we acknowledge that we are not able to answer the causality question and this is an important caveat to the observations below in the report. Do better companies hire more women, do women choose to work for more successful companies, or do women themselves help improve companies’ performance? The most likely answer is a combination of the three. But, we would argue from our analysis that women in management are more of an influence on corporate performance than simply women in the boardroom, if still lacking a sufficient timeline of management diversity data to make broader claims of definitive causality.

They quote with approval the work of Wooley et al. (2010 ) which Bates and Gupta (2017) have shown not to replicate. This is no crime, but it may have established expectations on the part of the authors.

A fascinating study led by Professor Anita Woolley at Carnegie Mellon’s Tepper School of Business shows that it is not the greatest ability that leads to the best answer or outcome. Within a group working together, the presence of a woman within the group is one of the key factors that influences the group’s collective “intelligence” or in other words the ability of the group to make successful decisions. Skill sets are different, one is not necessarily better than another, but enabling seems as important as being able. This was also a key message of our initial report.

There is also a positive correlation between market capitalization of a company and the level of gender diversity at both the board level and in top management. Small company management tends to be less diverse.

Comment: This may be a clue as to what is going on.

The report is written in the usual corporate back-to-front way, with explanatory congratulations at the beginning, all the results next, together with glossy pictures, and then a list of policy recommendations. Then there are lots more pictures and some tables and graphs. Much later, they tell you what methods they used.

As it stands, although this is a cross-sectional study, it shows that there is an association between women on Boards and management of companies on one hand, and good company performance on the other hand. I think that, instead of more analysis of the data as they are, they should correct for company size, and very probably for company age. A look at startups would also be instructive. In that way they might be able to counter the strong impression that profitable companies have added women to non-crucial positions late in the day, just to appear women-friendly. The sort of companies that employ their own boardroom chef, and have a corporate jet, and really, really believe in the virtues of women in high places!

• Category: Ideology • Tags: Feminism, Political Correctness 
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  1. dearieme says:

    If there were a great pool of underused, talented women then companies would snap them up and so out-compete their rivals. That being so, how’s a poor girl going to make the argument for employing more corporate women?

    Got it! Argue that ‘within a group working together, the presence of a woman within the group is one of the key factors that influences the group’s collective “intelligence” or in other words the ability of the group to make successful decisions’. Mind you, it only makes a case for one woman. Maybe the CEO often has only one daughter.

    I suspect that the central truth is the bleedin’ obvious: women bear children, and often want to raise them too.

  2. Renoman says:

    If there was money in it, they’d be doing it. Most companies view Women employees as more troublesome than men, they gossip and complain, wear their sexuality on their forehead and are sick a lot.

    • Replies: @CSR
  3. G Pinfold says:

    This study is ‘diversity is our strength’ writ small.
    All the evidence for the premise is tainted, flawed or feeble.
    It may be that the old ways worked quite well.

  4. We have created a proprietary database from Credit Suisse’s global company research coverage, amounting to more than 3,000 companies across 40 countries and all major sectors—

    I’d be curious to know if these were all Western firms where the corporate culture tends to be about the same and the financial goals similar. A contrast with the same number of Chinese firms would make a better study for the corporate culture and financial goals are quite different. This might better gauge the effect of female participation. Consideration of possible first cause can be found here.

  5. How about companies that care about developing women managers might have a management team (be it male dominated or not) that is competent in a number of dimensions that lead to sustained success? The women in management can just as easily be a symptom of as a cause of success.

    I’m reminded, BTW, of Marissa Meyer and Carly Fiorina, among others, who were spectacular failures as managers but raging successes as self-promoters.

  6. Anon • Disclaimer says:

    This study is basically useless–so many flaws in methodology, it is obviously feminist dogma masquerading as science. What stands out most to me is the entire study is made in financial companies, but pretends the results are applicable to any type of company–engineering, clown shoe repair, pet food flavoring. The nature of the business will probably be THE most important factor for a study like this. And frankly…financial companies are only interesting to financial companies.

    In the STEM field, in particular engineer-heavy and programming-heavy fields, there is a mountain of anecdotal data online, where anonymous commenters can write what they truly feel and see, that suggest women in STEM is a very bad idea. On top of that there is the solid scientific data on male vs female cognitive abilities, as well as behavioral science, which shows men and women to have very different aptitudes.

    Women in STEM is terrible. Women in business is terrible. Women in the work force killed the middle class family by driving wages down to where one male breadwinner cannot support a family. These are the realities which have emerged 40 years after feminism “smashed the patriarchy”.

    I’ll bet the farm that unconstrained, science can prove the more women in the work place, the less chance of growth and overall success. But Pandora is out of the box–we’ll never put women back into the home (in the West). I believe talented, intelligent women should work, and if they possess special talents, indeed encouraged to work. But the vast majority of them need to go back to mothering and home-making. It was as wives and mothers that women have been esteemed and cherished throughout the last 7,000 years of civilization, up until about 50 years ago!

    Modern women are miserable. Wage slaves, depressed, spiritually toxic with sexual freedom that goes against their nature. Western women put off their greatest gift and role on Earth, to have babies, in order to go be miserable at the office like every other chump. Men lose women at home in their prime, and their children get raised by strangers at day care centers since the wife HAS to work or be told she is a failure as a Strong Independent Womyn. Single working mothers abound, fatherless children grow up dysfunctional across society.

    Is there a single man anywhere on Earth who is attracted to a woman because she wields corporate power? No. It’s a huge turn-off. There is nothing so sad, pathetic and ugly as a woman acting like a man, at work or at play.

  7. Anonymous • Disclaimer says:

    Absent a longitudinal study

    There is a natural longitudinal study. There is an index fund that invests in companies with women in leading roles. Pax Ellevate Global Women’s Index Fund (ticker: PXWIX). Check it out against Dow Jones, S&P 500 ot Nasdaq. it consistently underperformed these male-dominated indexes by a wide margin. In fact, if you invested in 1993 in PXWIX it means that today you saw a net loss after correction for inflation.

    This is how how they describe their strategy and advantages (

    The Fund is the first broadly diversified mutual fund that invests in the highest-rated companies in the world for advancing women through gender diversity on their boards and in executive management.

    Research indicates that companies with more women in leadership have higher returns on capital, greater innovation, increased productivity and higher employee retention and satisfaction.”

    Let’s just check that diversity advantage. Starting from October 1993, the gains, without inflation correction, are:
    PXWEX +131.7%
    ^DJI +470.3%
    ^GSPS (S&P 500 index) +422.5%
    ^IXIC (Nasdaq composite) +722.3%

    $100 in 1993 would be like $169 in 2017.

    There is another such experiment: SPDR SSGA Gender Diversity Index ETF (ticker: SHE)

    “The SPDR SSGA Gender Diversity Index ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the SSGA Gender Diversity Index (the “Index”)
    Seeks to provide exposure to US companies that demonstrate greater gender diversity within senior leadership than other firms in their sector
    Companies in the Index are ranked within each sector by three gender diversity ratios
    The Index seeks to minimize variations in sector weights compared to the composition of the index’s broader investment universe by focusing on companies with the highest levels within their sectors of senior leadership gender diversity”

    SHE only started a year ago but exactly the same story here:
    SHE +3.0%
    ^DJI +18.2%
    ^GSPS (S&P 500 index) +12.5%
    ^IXIC (Nasdaq composite) +20.5%

    Not much is changing when one changes the starting point for comparisons.

    • Replies: @James Thompson
    , @Anonymous
  8. @Anonymous

    Thank you. It is great to have knowledgeable readers!

  9. Anonymous • Disclaimer says:

    ^GSPS should be ^GSPC in both instances. Sorry.

    A reasonable critique is that somewhere between 60 and 90% (varies with markets and years) of all hand-picked funds fail to outperform basic indexes of the entire market. It’s not a very strong argument because only very small % of them under-perform by so much or so consistently.

    • Replies: @res
  10. res says:

    Any idea how a long-short investment in GSPC and PXWEX would have performed (even if only in theory) over that time (assuming periodic rebalancing)? I wonder how that would vary with the stock market cycle. It seems like something like PXWEX would do well during the more optimistic (less financially discriminating) periods.

    PXWEX is listed in the World Large Stock category. Would it be more appropriate to use an index for that category to compare?
    Over the last 10 years it does not seem to do that poorly relative to its category:
    But, 23 of the 25 top holdings are in the US. Perhaps the US indices are more appropriate. I hadn’t seen the Morningstar visualizer for performance of the top 25 holdings before. Pretty cool.

    Thanks for your informative comments!

    • Replies: @Anonymous
  11. This sort of stuff is what you get thrown at you on your mandatory diversity training, where “studies show” that greater diversity = greater profit. But like the $250-million-odd that Google (2% black employees) have thrown at diversity initiatives, the real value of such training is as an insurance policy against governmental investigation/interference.

    Japanese companies don’t seem very diverse, yet Japan seems to have no problem selling its goods to the world.

  12. Anonymous • Disclaimer says:

    Perfectly reasonable comment, thank you. Trying to compare more apple to apples, I took all funds with at least 5 years history that are listed by Morningstar as “World Large Stock”:$FOCA$WS.aspx and made a histogram.

    Here is the result:

    You are correct: the PXWEX fund is unexceptional but not poorly performing against peers. It is right in the middle, beating an average by a small amount.

    • Replies: @res
  13. res says:

    Thanks! How do you feel about my observation that despite its category PXWEX appears to be dominated by US stocks? The 5 year yield of the Vanguard 500 Index is 14%! An overweight in US stocks during that period would make PXWEX look better than it really is, right?

    • Replies: @Anonymous
  14. “We have created a proprietary database from Credit Suisse’s global company research coverage, amounting to more than 3,000 companies ”

    The table, of course has 80,000 companies .

    I assume the article was written by a woman.

  15. Anonymous • Disclaimer says:

    I don’t know. It’s hard to say without actually looking into allocation for each/most funds. Just from clicking on about ten random tickers on that list, the US/no-US ratio, within similar yields, is not hugely different from PXWEX.

    • Replies: @res
  16. “Marissa Meyer and Carly Fiorina, among others, who were spectacular failures as managers but raging successes as self-promoters”

    I wonder if you/we notice the failures more? The most spectacular example of talking a good product (but not creating one) is surely the female Steve Jobs who founded Theranos.

    • Replies: @res
  17. res says:

    Fair enough. Thanks for your reply and the rest of your comments!

  18. res says:

    I wonder if you/we notice the failures more? The most spectacular example of talking a good product (but not creating one) is surely the female Steve Jobs who founded Theranos.

    Good question (and confirmation bias can be hard to avoid). The way to address it would be to look across a broader group of female CEOs (does anyone have data?). I think part of the problem is that we tend to notice things in proportion to how much they are hyped in the first place, and hype all too often seems to be a negative indicator of future performance.

  19. CSR says:

    In S. Korea and Japan, young women just serve the coffee and try to look cute in a nice mini-skirt with a smile. It is quite pleasant in a day at the company when this happens. Women have the hips for birthing children and breasts for feeding them.

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