Just over one in ten company directors in the UK is a woman. Among the 100 largest British companies (on the FTSE100) that rises to 14.9 per cent and Lord Davies - in a report last year - set a target for 25 per cent female membership of boards by 2015.
But was he dreadfully misguided?
In a report commissioned by the Bundesbank, Germany’s central bank, the three authors (all male) reveal that bank boards with more women take more risks than boards with fewer women. They were looking at all German banks (over 3,500) between 1994 and 2010 - a period which, of course, includes some spectacular corporate disasters and which has triggered a debate on the culture of risk-taking.
In summary, the report (which you can read in English here) finds the following three main conclusions:
First, banks take on more risk if they are managed by younger executives. Second, female board members tend to increase risk taking. A detailed exploration suggests this result reflects that female executives have less expertise on the executive level than their male counterparts, and we obtain this result despite the fact that we control for executives’ age, which is correlated with experience. Third, raising the proportion of executives with Ph.D. degrees reduces risk taking.
So a board made up of very well-qualified old men is the ideal? Although the report’s authors don’t extrapolate from their results, I think the obvious conclusion is that this is a short-lived phenomenon: if the problem is a lack of experience, the more experience the women now on company boards get, the less this effect will be seen. The answer is more women onto boards, not fewer.