More women on the Board = less fraud?

If you are a woman reading this, you probably sense that there’s truth in the assumption being made in the headline above. But you don’t have to go by gut feel, because the results of a 10-year long study by three Professors of leading business schools from China, Hong Kong and York University, prove exactly that – companies with a higher proportion of women directors on their board and with female chairpersons, commit less fraud.

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So what did the study do? They looked at the impact of gender difference on corporate fraud in China over between 2001 and 2010. They studied data on enforcement action announcements made by the China Securities Regulatory Commission (CSRC) for regulatory and fraud violations committed by listed Chinese companies. And they found that a more gender diverse board means there’s less likelihood, as well as less severity, of corporate fraud.

The good news doesn’t end there. Even the markets responded better (less impact on share prices) to announcements of regulatory or fraud violations from companies that had a gender diverse board! By the way, older studies show that on average a company loses about 5% of its revenue to fraud annually, so it is an important issue that top managements must consider.

What do you think of these findings? Is this only in China or could it be true of India and the rest of the world as well? Do women really have such a positive influence?

And why is morality easier for our gender?

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My own guesses would come from the evolutionary roles the genders got allotted. Males had to go out and hunt and gather and accumulate resources. Females brought up the young and taught them the values that helped human kind survive, be social and thrive.

Men traditionally have been the risk takers. As caregivers women are perhaps built to be more cautious and more risk averse.

Maybe all that makes men a bit blinkered when it comes to evaluating the risks associated with some decisions. The rewards are what they focus on. We women aren’t so easily tempted by the short cut, the easy way out and fast buck, I guess. Now, if only we could make this ‘man’s world’ realise that ‘might is right’ and grabbing whatever you can is no longer the way forward for our species!

Which brings me back to my regular request to my gender: Ladies, speak up and let your voice be heard – at home, on the road, and definitely in the board room!

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