Stock Price May Drop When a Woman Joins the Board

Last Updated Apr 16, 2010 2:12 PM EDT

Hard to believe, but recent research supports the idea that a company's stock price will drop when a woman joins the board of directors. According to a new HBR.org series on workplace diversity:

"Studies looking specifically at the consequences of appointing women to corporate directorships show that stock performance tends to be unchanged or slightly worse after boards increase their gender diversity," writes Andrew O'Connell.

Why? Bias held by small-share investors, who are for some reason made nervous by the growing diversity on the board and sell, driving the price down. Investors who hold large blocks of stock actually buy more shares, but not enough to counter the smalls.

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.