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New study shows more women on Fortune 100 & 500 boards

The push to increase the percentage of women on corporate boards is reflected in a study published Wednesday by the Alliance for Board Diversity and Deloitte.

Among Fortune 500 firms, the study finds that in 2018, women held 22.5% of board positions, an increase from 20.2% in 2016. Among Fortune 100 firms, women in 2018 held 25% of board seats, up from 23% in 2016.

The study also tracked changes to minority board representation. African American and Asian women made a major jump in board positions held within Fortune 100 companies, from 30.8% in 2016 to 44.8% in 2018.

The research adds to a growing set of data relied upon, in part, to postulate that firms with gender-diverse boards outperform their more homogenous counterparts.

“We passionately believe that diversity and inclusion are critical elements of creating better solutions to really complex problems, whether it's in the boardroom, in the C-suite, or just in teams,” Deb DeHaas, Deloitte’s Vice Chairman and National Managing Partner Center for Board Effectiveness, said.

Referenced in Deloitte’s study is a popularly-cited 2012 Credit Suisse Research Institute report showing that, over six years, shares in global companies with a market capitalization exceeding $10 billion perform 26% better when at least one woman holds a board seat.

This year, the California’s legislature used similar data to require diverse boards by law, becoming the first state in the nation to adopt statutory quotas for female directorships within publicly-traded companies.

Does board diversity improve corporate performance?

University of Pennsylvania Wharton School of Business professor, Katherine Klein, says that “gold standard” research does not support conclusions that female-inclusive board composition breeds stronger company results.

“There’s zero relationship between ... gender diversity and company performance,” Klein said based on a review of two meta-analyses performed concerning the question. A 2015 analysis by Post and Byron included 140 studies on board diversity covering 90,000 companies, and a 2015 analysis by Pletzer, Nikolova, Kedzior, and Voelpel examined data from 20 studies, covering 3,097 companies.

“A higher representation of females on corporate boards is neither related to a decrease, nor to an increase in firm financial performance, confirming findings from a similar meta-analysis on this topic,” the Pletzer study concluded.

Asked about the California mandate, Klein said, “Personally I have very, very mixed feelings, because I am delighted to see more diversity on boards, because boards are powerful, they’re opportunity, and oversight.”

“I think there are other arguments for this policy, but if you're trying to justify this policy on the basis of this is going to improve corporate performance, the best research evidence does not suggest diversity is going to improve corporate performance,” Klein said.

DeHaas said Deloitte hasn’t taken a position on California’s new law.

“We strongly support diversity in the boardroom and in the executive leadership ranks, and frankly, in all parts of the organization as a way to get to better solutions to complicated issues,” she said. “To the extent that there's progress, that's something that we're very supportive of.”

Pressure from investors, activists, and legislatures

A main area of progress that DeHaas points out from the study is the pace of women securing board roles.

“There's a bit of an acceleration in in the progress, and I do think that the outside voices that are speaking up on this topic are impacting the pace,” DeHaas said. “In the last several years, there's been a much stronger voice from investors.” According to the report, increasing pressure is coming from the market, investors, activists, and legislatures.

“I think what we are seeing is that there is an increasing expectation that companies will have gender diversity,” Klein said. “Corporate activists are looking at boards that don't have gender diversity and they're signaling, ‘We don't think this is a good thing.’ And all of this is creating a social norm...It is increasingly part of how we evaluate company's reputation.”

Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously produced live news for CNN and is a former litigation attorney. Follow her on Twitter at @alexiskweed

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