According to the study women seem to be less interested in pursuing risky transactions and require the promise of a higher return on investment.
“Female board members play a significant role in mitigating the empire-building tendency of CEOs through the acquisition of other companies”, says Sauder finance professor Kai Li, who co-authored the study. “On average, merger and acquisition transactions don’t create shareholder value, so women are having a real impact in protecting shareholder investment and overall firm performance.”
The research by UBC shows the cost of a successful acquisition is reduced by 15.4 per cent with each female director added on a board. It also reveals that each additional female director reduces the number of a company’s attempted takeover bids by 7.6 per cent.
“Our findings show that the prudence exhibited by women directors in negotiating mergers and acquisitions has had a substantial positive effect on maintaining firm value,” say Professor Li. “This finding adds fire and force to recent calls to mandate a minimum number of women on the boards of publicly traded companies.”