A few weeks ago we sent a FoI Act request to the EHRC, seeking their evidence of the ‘missing link’. This was their response, and in red font I’ve included some comments:

120911 EHRC response to FoI Act request for information, with my comments

You’ll see we’ve asked for an internal review of the response. EHRC is using a recently-published book as a shield. Michael Klein of http://sciencefiles.org has kindly reviewed the book, and provided us with the following review, for which we thank him warmly:

120928 Michael Klein’s critique of Fagan et al book

I shall shortly be emailing one of the co-editors of the book, Professor Colette Fagan colette.fagan@manchester.ac.uk of the School of Social Sciences at the University of Manchester, to seek her evidence for the ‘missing link’.

Regular visitors to this blog will be aware that not even one academic study shows evidence of a positive causal link between ‘improving’ gender diversity on boards and enhanced corporate performance. We’ve asked dozens of organisations and hundreds of individuals to provide evidence of the ‘missing link’ and none has been provided.

On this blog we’ve provided links to three studies showing evidence of a negative causal link:

– Ahern / Dittmar

– Adams / Ferreira

– Deutsche Bundesbank

I’m indebted to Michael Klein of http://sciencefiles.org for directing me to a fourth study showing evidence of the negative link. It was carried out by two Norwegian academics, Professor Oyvind Bohren (Norwegian School of Management) and Professor R. Oystein Strom (Oslo and Akershus University College). Their report was published in 2010. We shall henceforth refer to it as the Bohren/Strom study. The paper’s full Abstract:

This paper analyzes the economic rationale for board regulation in place and for introducing new regulation in the future. We relate the value of the firm to the use of employee directors, board independence, directors with multiple seats, and to gender diversity. Our evidence shows that the firm creates more value for its owners when the board has no employee directors, when its directors have strong links to other boards, and when gender diversity is low. We find no relationship between firm performance and board independence. These characteristics of value-creating boards support neither popular opinion nor the current politics of corporate governance.

The full paper may be accessed here:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1733385

Now that’s what I call a good end to the week.

My thanks to Alicia for an interesting discussion this afternoon. She called to ask me what progress we’re making with persuading the government to engage with out arguments.I explained we have a meeting arranged with a senior politician shortly, but trying to engage with people like David Cameron, Vince Cable and Helen Whitehead (DBIS) is proving futile. Alicia then made an interesting analogy:

It’s as if the government had been persuaded by the evidence put forward by academics at the Flat Earth Society, in support of the theory that the world is flat. Policies have been developed on the basis of the theory, and more will be developed over time. Politicians and civil servants are busy people, too busy to consider alternative theories, especially the one put forward in some quarters that the earth isn’t flat, but is a sphere! How crazy would that be, if it were true? Wouldn’t it be obvious for us all to see? And wouldn’t people spin off a spherical earth, due to centrifugal force? No, a flat earth makes much more sense. There’s no need to engage with people who suggest otherwise.

Intrigued by the reference to the Adams and Ferreira paper (2008) in the Credit Suisse report, I’ve looked it up online. Here’s a link to it:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1107721

The paper’s full Abstract:

We show that female directors have a significant impact on board inputs and firm outcomes. In a sample of US firms, we find that female directors have better attendance records than male directors, male directors have fewer attendance problems the more gender-diverse the board is, and women are more likely to join monitoring committees. These results suggest that gender-diverse boards allocate more effort to monitoring. Accordingly, we find that CEO turnover is more sensitive to stock performance and directors receive more equity-based compensation in firms with more gender-diverse boards. However, the average effect of gender diversity on firm performance is negative. This negative effect is driven by companies with fewer takeover defenses. Our results suggest that mandating gender quotas for directors can reduce firm value for well-governed firms.

As noted in an earlier post, proponents of ‘improved’ gender diversity in boardrooms have already started to misrepresent the Credit Suisse Research Institute report, ‘Gender diversity and corporate performance’, published last month, taking carefully selected extracts and using them to infer a positive causal link between… you know the rest. A link to the report is here.

We’re hoping to meet with Credit Suisse people shortly to explain how (in our view) the report is flawed in some areas, so we’ve decided not to publicly post a detailed critique at this stage. We feel one point is worth making, however. Remarkably, the report makes no mention of the Ahern/Dittmar study on the impact of quotas in Norway (2011) for the University of Michigan, nor the Deutsche Bundesbank study (2012), both of which show a negative causal link between… you know the rest.

Should you encounter anyone stating (or even implying) that the Credit Suisse report shows a causal link, I suggest you refer them to the following extract on page 17 of the report:

There is a significant body of research that supports the idea that there is no causation between greater gender diversity and improved profitability and stock price performance. Instead the link may be the positive signal that is sent to the market by the appointment of more women: first because it may signal greater focus on corporate governance and second because it is a sign that the company is already doing well.

Adams and Ferreira (2009) looked at the impact of greater gender diversity on 1,939 US stocks between 1996 and 2003. On the face of it, their data showed positive gender diversity effects. However, using two different techniques to handle reverse causation, they found statistically significant negative effects on profits and stock value following the appointment of women to the board.

Farrell and Hersch looked at 300 Fortune 500 companies between 1990 and 1999 and showed that firms with strong profits (ROA) are more likely to appoint female directors but that female directors do not affect subsequent performance.

So increasing female representation on boards will have either (at worst) a negative impact on corporate performance, or (at best) no impact. The report’s hardly the ringing endorsement for their cause which proponents of GDITB are claiming, is it? As always, we’re left with the inescapable conclusion that GDITB is nothing other than a dangerous and anti-meritocratic left-wing social engineering initiative.

We’ve recently had responses from both the Equality and Human Rights Commission (‘EHRC’) and the Department of Business, Innovation and Skills (‘DBIS’), to our FoI requests for evidence supporting the claim of a positive causal link between ‘improved’ gender diversity on boards and enhanced corporate performance. The EHRC response was literally laughable, and we’ll be posting a critique of it in due course. The DBIS response was merely poor – I’m being kind – so I’m going to ask them for an internal review of the matter. Here’s the letter received from the DBIS, along with our critique:

120917 DBIS response to FoI Act request, and our critique

On Thursday I had a very civil conversation with Helen Whitehead, the author of the DBIS letter. I offered to present my IEA lecture to her and her colleagues, including Vince Cable. He’s among the politicians who most need to be exposed to the robust case against ‘improving’ gender diversity in boardrooms. The number also includes David Cameron, George Osborne and Theresa May. I wrote to them recently, again offering to present my IEA lecture.

On Tuesday, 18 September, there was a 16-page pullout (sponsored by Accenture) in The Times titled, ‘Women Mean Business’. It’s full of the usual claptrap we’ve heard a thousand times before, so rather than insult your intelligence I’ll summarise the content as ‘Blah, blah, blah’. But two things caught my eye:

– references to a report (‘Gender Diversity and Corporate Performance’ published by the Credit Suisse Research Institute in August 2012. The references (those I’ve read so far, anyway) were carefully selected so as to mis-represent the Credit Suisse report as providing evidence of a link (again, a causal link rather than just mere correlation) between more women on boards and enhanced corporate performance. A standard tactic we’ve exposed on numerous occasions with regards to reporting of extracts from McKinsey and Catalyst reports in particular.

–  this next bit will go in my file, ‘S*** you couldn’t make up.’ It’s a piece titled, ‘Living in the age of Aquarius’ by the astrologer Shelley von Strunkel, in which she ‘analyses the role of women, from an astrological viewpoint, and predicts growing female independence.’

Can we look forward to a future in which female board directors appoint new directors on the basis of their astrological charts? Or maybe their handwriting? I can see that working out well… for atrologers and graphologists, anyway.

We know that a good deal of positive discrimination for women takes place in recruitment and promotion terms, although it’s illegal in the UK. Both men and women tend to favour women in employment terms. It’s one of the key reasons behind male unemployment being markedly higher than female unemployment. We know unemployment is more likely to be a cause of depression for men than for women. Women can more reliably expect to be supported financially by a partner over long periods of unemployment. Unemployment-induced depression is a recognised contributor to the differential between male and female suicide rates. In the UK men are 3.5 times more likely than women to commit suicide.

Gender preferencing in employment is clearly an important phenomenon, albeit rarely reported by the media. So I was pleased today to be alerted by the cartoonist Tim Watts to his designs for MAGPIE: Men against gender preference in employment. It’s available as a logo on T-shirts etc., but let’s hope someone launches a proper campaign one day, and we start to see lawsuits against employers responsible for gender preferencing.

The site from which you can buy the T-shirts, mugs etc.:

http://www.cafepress.co.uk/magpie07

Isn’t it remarkable how publicly-owned institutions, and left-leaning businesses and publications, are keen to tell the corporate world how to run itself (e.g. by ‘improving’ gender diversity in the boardroom’), whilst being so incapable of managing themselves efficiently? One thinks inevitably of the famously inefficient leftie organisation, the BBC, and The Guardian (loss-making) but what of Royal Mail? A £9 billion+ turnover publicly-owned business which struggles to break even (and in some years doesn’t), despite a monopolistic stranglehold in some areas. For the past two years Royal Mail’s chief executive has been a Canadian woman, Moya Greene, who previously worked for Canada Post (also publicly-owned). It seems Ms Greene is now keen to lead the fight for women to enter the boardroom in greater numbers. If nothing else positive comes of this, that poor Helena Morrissey may now allow herself the odd day off.

The following is from an article in today’s edition of The Guardian. The full article includes comments from Ceri Goddard, chief executive of the Fawcett Society, the same woman who insulted viewers’ intelligence with her comments recently on BBC TV’s feminist masterpiece Women at the Top. I won’t insult your intelligence by giving exposure to her remarks. They’re utterly predictable, anyway.

Royal Mail chief executive Moya Greene has become one of the most senior figures in corporate Britain to publicly back recruitment quotas for women in the workplace – including the boardroom. Greene told an audience at the Communication Workers Union’s women’s section in Peterborough she was prepared to champion quotas, despite many of her peers in business having lobbied furiously to block such a move from Brussels.

‘There is something about the UK – for all its egalitarianism, women are not represented as they should be in society or companies,’ Greene said. Despite modest moves in the right direction, expectations for women in the workplace were changing at a ‘glacial place’. She told the union delegates: ‘If you want quotas, I am open to leading that discussion.’…

Greene told the women delegates that although the recruitment industry is overwhelmingly female, the lists they send for jobs are predominantly male. ‘I’ve sent back the lists and have told others to do the same – it’s almost a campaign.’ She recalled having to do the same thing in her previous job. ‘At Canada Post I had to say we wouldn’t accept white, male lists…’

Let’s do some switching here. What would Ms Greene say of a male chief executive who said he wouldn’t accept ‘black, female’ lists? Presumably that he was being both racist and sexist?

Some good news to start the week, from the FT:

http://www.ft.com/cms/s/0/ed7cac44-fff3-11e1-831d-00144feabdc0.html#ixzz26ibnGoUs

Now we just need to persuade Comrade Cameron and Comrade Cable to drop their threats of quotas… how difficult can that be?