VIDEO: Michelle Grattan on the government's drought policy - and the trust divide in politics

Michelle Grattan says the announcement of extra money for drought-stricken farmers "won't be enough" to alleviate pressure on the government on the issue of drought. ShutterstockUniversity of Canberra...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Our ability to manufacture minerals could transform the gem market, medical industries and even help suck carbon from the air

Pictured is a slag pile at Broken Hill in New South Wales. Slag is a man-made waste product created during smelting. Anita Parbhakar-Fox, Author providedLast month, scientists uncovered a mineral call...

Anita Parbhakar-Fox, Senior Research Fellow in Geometallurgy/Applied Geochemistry, The University of Queensland - avatar Anita Parbhakar-Fox, Senior Research Fellow in Geometallurgy/Applied Geochemistry, The University of Queensland

Lambie stays mute on medevac vote after Senate inquiry splits on party lines

Jacqui Lambie has yet to announce whether she will support the bill to have medevac repealed.AAP/Mick TsikasThe Senate inquiry into repealing medevac has predictably split along party lines, with the ...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Sydney's 9,189 'sister politicians' who petitioned Queen Victoria

One spring morning in 1850, over 8,000 Sydneysiders marched through town to protest the resumption of transportation – the act of sending British criminals to Australia. It was the largest prote...

Kiera Lindsey, University of Technology Sydney - avatar Kiera Lindsey, University of Technology Sydney

Penny Whetton: A pioneering climate scientist skilled in the art of life

Penny Whetton, right, addressing a March for Science rally. Her death last month shocked and saddened colleagues.Supplied by familyLast month we lost Dr Penny Whetton - one of the world’s most r...

John M Clarke, Team Leader, Regional Projections, CSIRO - avatar John M Clarke, Team Leader, Regional Projections, CSIRO

​The Coalition government is (again) trying to put the squeeze on the ABC

The Coalition government has reintroduced a bill seeking to mandate the ABC devote more resources to covering regional Australia – a measure that has been defeated before by parliament.Danny Cas...

Fiona R Martin, Senior Lecturer in Convergent and Online Media, University of Sydney - avatar Fiona R Martin, Senior Lecturer in Convergent and Online Media, University of Sydney

Trump is flouting global trade rules with China yet embracing them with the EU – here's why it matters

Just as America’s trade war with China may be winding down, its troubles with Europe seem to be growing. On Oct. 11, President Donald Trump said that the United States and China had agreed, in p...

Charles Hankla, Associate Professor of Political Science, Georgia State University - avatar Charles Hankla, Associate Professor of Political Science, Georgia State University

Where is my Xanax Rx? Why your doctor may be concerned about prescribing benzodiazepines

Xanax, sold generically as alprazolam, is a popular drug to treat anxiety -- and to sell on the street.PureRadiancePhoto/Shutterstock.comAs an academic psychiatrist who treats people with anxiety and ...

Arash Javanbakht, Assistant Professor of Psychiatry, Wayne State University - avatar Arash Javanbakht, Assistant Professor of Psychiatry, Wayne State University

Blockchain voting is vulnerable to hackers, software glitches and bad ID photos – among other problems

How secure is online voting with blockchain technology?WhiteDragon/Shutterstock.comA developing technology called “blockchain” has gotten attention from election officials, startups and ev...

Nir Kshetri, Professor of Management, University of North Carolina – Greensboro - avatar Nir Kshetri, Professor of Management, University of North Carolina – Greensboro

Pope affirms Catholic Church's duty to indigenous Amazonians hurt by climate change

Pope Francis at the start of the Amazon synod, at the Vatican, Oct. 7, 2019.AP Photo/Andrew MedichiniThe Catholic Church “hears the cry” of the Amazon and its peoples. That’s the mes...

Vincent J. Miller, Professor of Religious Studies, University of Dayton - avatar Vincent J. Miller, Professor of Religious Studies, University of Dayton

How Mister Rogers' faith shaped his idea of children's television

Fred Rogers rehearses with some of his puppet friends in Pittsburgh,.Gene J. Puskarg/AP The beloved children’s television icon Fred Rogers – who is played by actor Tom Hanks in the upcomin...

L. Benjamin Rolsky, Adjunct Professor of History, Religion, and Anthropology, Monmouth University - avatar L. Benjamin Rolsky, Adjunct Professor of History, Religion, and Anthropology, Monmouth University

The Chicago teachers' strike isn't just about kids – it's about union power too

Chicago's teachers are on strike for the first time since 2012.AP Photo/Martha IrvineClasses in Chicago’s public schools were canceled starting Oct. 17 as more than 25,000 teachers in the nation...

Bradley D. Marianno, Assistant Professor of Educational Policy & Leadership, University of Nevada, Las Vegas - avatar Bradley D. Marianno, Assistant Professor of Educational Policy & Leadership, University of Nevada, Las Vegas

This overdose-reversal medicine could reduce opioid deaths – so why don't more people carry it?

Naloxone, available as a nasal spray called Narcan or in injectable form, resuscitates 100% of people who overdose if administered quickly. AP Photo/Patrick SemanskyForty-seven thousand Americans died...

Tarlise Townsend, Joint PhD Student, Health Policy and Sociology, University of Michigan - avatar Tarlise Townsend, Joint PhD Student, Health Policy and Sociology, University of Michigan

Here's what's missing in efforts to curb heavy drinking and hazing on campus

Colleges throughout the nation are beset with problems of alcohol and hazing on campus. AP Photo/Dake KangMaxwell Gruver had been a student at Louisiana State University for only a few weeks in 2017 b...

Adam M. McCready, Visiting Assistant Professor, Higher Education & Student Affairs, University of Connecticut - avatar Adam M. McCready, Visiting Assistant Professor, Higher Education & Student Affairs, University of Connecticut

imageResearch dispels the myth that if Lehman Brothers had been "Lehman Sisters" it would not have collapsedAAP

There is a popular notion abroad that women are not risk takers and their mere presence on a bank board will reduce risky strategies and behaviours.

Over the past years there has been an increasing trend of female directors on company boards. A leading factor has been the introduction of gender diversity policies. Already women hold 23% of directorships in the United Kingdom’s top companies, just shy of the government’s target of 25% by 2015.

According to the Australian Institute of Company Directors, at the end of August this year, 18.3% of top 200 ASX company board directors were women.

Among the Big Four banks, the ratio ranges from two women on a board of 12 for NAB, to four women on a board of nine for Westpac. On the Reserve Bank of Australia board, three of the nine directors are women.

Does this mean our banks, by virtue of this trend, are falling into an increasingly safe pair of hands?

The safety factor concept has been used in the past to support the argument for gender quotas for boards.

Some of the world’s leading economic spokeswomen (and men) have very publicly argued women are “typically” more risk-averse and therefore their presence on boards helps contain risky behaviour. This premise led to what became known as the “Lehman Sisters” hypothesis, which arose in the years following the global financial crisis. The theory was if Lehman Brothers had been Lehman Sisters (or brothers and sisters), there would have been no collapse.

Why more women on boards will not lead to less risk

Sadly for those who believe banks revel in the occasional risky business, adding more women to the board is unlikely to have an impact.

In a research paper I co-authored with the University of Queensland’s Vanitha Ragunathan, we showed that more women on boards will not lead to less risk in banks.

Women who choose to follow a career path leading to a directorship are not the “typical” woman in risk-aversion studies. Instead, female directors are likely to be less risk-averse than the “typical” woman because of selection. That is, they would not have chosen this career path if they were so risk-averse.

Selection is likely to be even more important for financial firms because finance is a business dealing with risk. Women in finance may well have the same average levels of risk aversion as men in finance.

Our research showed that female MBA students who choose to enter finance after graduating are much less risk-averse than female MBA students not entering finance. In fact, female MBA students in finance are less risk-averse than male MBA students in finance.

The research shows the dangers of stereotyping women. Applying gender differences that may occur within the population to the management level does not work.

But gender diversity has other benefits

However, though having a greater proportion of women on bank boards may not reduce risk, it does provide other benefits.

Our study reviewed around 300 large publicly traded United States banks and bank holding companies across a four-year period spanning the 2007-2008 financial crisis. We found that US banks with more women on their boards were not less risky during this period. However, they did perform better during the financial crisis.

Male directors on boards with more women have fewer attendance problems. Female directors also tend to perform different committee duties than male directors.

Women are more likely to sit on board committees, especially those with key monitoring duties such as audit or corporate governance committees. However, they are not more likely to sit on banks’ risk committees. Banks themselves seem to not view their female directors as being more or less prone to avoiding risks than their male directors.

We still do not have a complete understanding of how and why gender diversity matters for corporate outcomes. We also do not know when diversity matters. However, the concept of using women on bank boards as a quick fix for bad corporate behaviour is simplistic and devalues the other benefits that diversity brings.

image

Renee Adams does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

Read more http://theconversation.com/risky-business-why-we-shouldnt-stereotype-female-board-directors-32685