Study Reveals That Women Directors Handle Mergers and Acquisitions Better

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A study by University of B.C’s (UBC) Sauder School of Business reveals that women directors are a better choice for dealing with mergers and acquisitions. Women become a preferred choice because male directors can give ill advises due to intrinsic motivations such as building an empire or wanting to erode the shareholder value for personal power but, with women board directors that is less likely to happen.

Researchers involved in the study analyzed a number of acquisition bids made between the years 1997 to 2009. Figures were calculated to determine the cost of each acquisition and its bid premium. The bid premium is computed by calculating the difference between the final price and the stock price prior to the signing of the deal. Figures obtained are then compared to the number of women directors on the board.

The study states that having even one women board director leads to reduced bid premiums paid by about 15 percent and about 8 percent lesser acquisition bids.

There has been a popular controversy internationally with the legislating of women representatives on various corporate boards. Amidst such an environment, this study sheds light on a new perspective on the topic and strengthens the argument in favor of female representation.

In 2005, a 40 percent quota was put on the mandate by Norway for women representation on corporate boards and it largely backfired. A professor of a university states that this is due to the lack of infrastructure. A mandate cannot reap benefits in isolation, there is need for mentorship and other forms of career support to bring forward a better qualified pool of women directors.

Greater awareness in regard to gender diversity for corporate decision making should be encouraged as it has chances of being beneficial to the shareholders as well as they are less over-confident in comparing the results to their male counterparts.

Generally, corporate boards of America and Canada have 0-1 women directors.

All people are likely to overestimate their abilities as per sociological studies however, the tendency to be overconfident is more readily found in men than women. Females are generally much more cautious in decision making be it in relation to alcohol, gambling, drugs, sex or employment.

There is a large pool of talented females in the business world, with the right skills set. Sadly, these women with the right potential are being exploited for business benefits. Even the school that conducted the study has a one-third of female MBA students and about 50 percent of its undergraduates are females. The fact that only one to two percent females are CEOs of the largest companies and only about 10 percent are women board directors in the world’s largest companies accounts for the underutilization of capabilities and potential of women in the business world.

Greater opportunities and platforms can help women gain a larger representation to have an impact on top business decision and build on much more careful and better decision making, as revealed by the study.


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