D'Onofrio Consulting Partners

Women on Boards: The Superheros of tomorrow?

August 1, 2016 • Women in Leadership


The number of women on boards is not shifting according to Catalyst whose census indicates that 19.9% of board seats were held by women last year, compared with 19.2% the year prior. Meanwhile, a new research paper by Adams suggests the number is smaller than we think. In her paper, she questions the evidence that corporations with female directors on their boards perform better, citing what we know from studies by Catalyst, McKinsey and others.


Because these studies are not held to the same rigorous research standards expected in academic settings, causal effects can and do affect results and conclusions. In particular, Adams highlights the problem of “endogeneity” where omitted variables, reverse causality and measurement error impact the results and conclusions drawn. She flags the need for better definition of “under-representation”; how to measure board diversity (E.g., should women be counted multiple times when they serve on more than one board?) and the business case for diversity (I.e., if male and females do not differ in skills, experiences and preferences, the case for diversity cannot be made).

While experiments are difficult to conduct, Adams advocates for tools and techniques that can bring more rigor to avoid correlations that imply causation in order to develop informed policy.


  • Measurement Errors:
    • Adams replicates the Catalyst study that finds changes in boardroom diversity results in large increases in Return on Equity (ROE). Using a sample of Riskmetrics board data on unregulated S&P 1500 firms for the period 1996-2003, she controlled for firm size and other variables and concluded that once “omitted variables” are factored in, the correlation is no longer significant.
    • By adding firm fixed effects, Adams suggests that firms with better corporate culture and workplace practices perform better and also have more female directors. After stripping out the culture effect, the relationship between diversity and performance is negative and still suffers from reverse causality problems.
  • Measuring Representation: Using several more current data sets, Adams plots female board representation by country and notes that board representation is generally trending upwards, albeit at different rates across different countries. USA, Norway, France and Spain emerge with the highest level of diversity with Norway leading the pack by a long margin (resulting from gender quota policies). Adams research reveals that that while we have better data to assess female representation, data sets and measurement techniques can vary widely, leading her to conclude that women are much less represented than we think they are. For instance, she demonstrates how director participation can be affected if women who serve on multiple boards are counted multiple times.
  • Gender Preferences Impact: In a review of more recent literature, Adams cites several research studies that examine corporate outcomes relative to CEO or board gender diversity. They reveal that women demonstrate lower levels of confidence, greater risk-aversion and greater “other-regarding’ preferences which translate to lower deal initiation, less overconfidence and less likelihood of overpaying among more diverse boards. In a Nordic control group, the female directors greater preferences for ‘other-regarding’ translated into fewer employee layoffs. While gender differences exist in the boardroom, they are not the same as those found in the general population.


Adams concludes that better data and empirical techniques are necessary to understand how the selection of women and the contribution they make affects firm outcomes. She recommends more research on:

  • The reasons why women are less represented on the boards of smaller firms
  • How the presence of women affects decision-making and corporate outcomes
  • How the number of women on a board affects results
  • The causes of under-representation of women on boards

“While they [women] may not (always) be superheros, there is little doubt that they will influence firm and societal outcomes. To characterize this influence we need a better understanding of what women bring to the boardroom table and how diversity affects firm outcomes.”

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Recommended Resources

  • 2020 Women On Boards is a non profit whose mission is to increase the percentage of women on U.S. company boards to 20% or greater by the year 2020. The cornerstone of its campaign is the 2020 Gender Diversity Directory, a database of public and private companies with the gender composition of their boards. A subset of this Directory is the 2020 Gender Diversity Index (GDI) which is based on the 2010 Fortune 1000 list of companies. 2020 WOB tracks this group of companies from year to year, measuring the percentage of board seats held by women. Utilizing the same list from year to year allows us to more accurately measure progress. You can browse the list or search the index.
  • Women on Boards (WOB) exists to help women in Australia and the U.K. to make the right connections and career choices to get to the top within their own company or to take on a board or committee role as a non executive director (NED), trustee or governor. Membership offers support and mentoring, as well as access to openings for women interested in serving on boards.

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