MainStreet) Having women on its board is a good way for a business to safeguard itself against financial losses and takeovers. At least, that's the conclusion of a study by the University of British Columbia's Sauder School of Business.
The study found that the more women there are on a corporate board, the less that corporation pays for each acquisition an average of 15.4% with each female director added. Each additional female board member also reduces the number of that company's attempted takeover bids by 7.6%.
"Female board members play a significant role in mitigating the empire-building tendency of CEOs through the acquisition of other companies." said Sauder finance professor and co-author of the study Kai Li in a press release. "On average, merger and acquisition transactions don't create shareholder value, so women are having a real impact in protecting shareholder investment and overall firm performance."
According to the researchers, the results suggest women are more cautious about and therefore less likely to pursue risky transactions; they need to be guaranteed a higher return on investment before they will partake in a deal."Our findings show that the prudence exhibited by women directors in negotiating mergers and acquisitions has had a substantial positive effect on maintaining firm value," Li said in the press release. "This finding adds fire and force to recent calls to mandate a minimum number of women on the boards of publicly traded companies." report last year criticizing the stagnation of female representation in U.S. boardrooms. The report lamented that women make up only between 11% to 12% of corporate board members the same as a decade ago.