Monday, March 19, 2012

Women in initial public offerings

Over the years, our initial public offering (IPOs) research team has built up a body of work on the role of women in the top teams of IPOs. Starting with data from the "class of 1993" and moving forward, we found the following:
  • Having women on the top team improves the first day gain in stock price.
  • Having women on the top team improves the first 90-day stock price gain, first year gain and gains up to 3 years post IPO (that's all we investigated).
  • The woman factor also positively affects earnings.
  • These results all control for other factors, so the "science" is done to account for other things that may be spuriously affecting the numbers.
  • The number of women never goes over 50% (that we've seen so far at least).
  • We just finished coding 2011 to see if this finding still holds up, and even though experts would say the market has changed a lot, we still get positive effect for women in management teams of IPOs.
This all begs the question -- why?
It would be easy to go down the path of the research showing that women are "different" as managers; they are better at blah blah and worse maybe at XYZ. I personally don't go there when talking about this work. That's because I hate bucketing the diversity of the world into these two buckets, men and women, and putting labels on what we do as better or worse.
Now, we see an effect -- a gender effect --so if I choose not to go down the path of how great women are, then to what do I attribute this effect? I call it the "mixing it up" effect.
Given that the IPOs never reach 100% women on their top teams, my theory (unproven so far) is that 100% women would be no better than 100% men. The key behind our finding, we think, is that women cause a "mixing up" that makes people a bit more uncomfortable. This results in asking more questions, thinking differently and making better decision, which then leads to better business.
We have some data that support this view, but in many ways this finding still remains a mystery. What do you think?