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Are women the solution to the financial crisis? A chorus of voices across Europe are saying they are. In France, CERAM Business School management professor Michel Ferrary found in a study that companies in the CAC40 that had high numbers of women in the senior ranks performed better than those that did not. In Iceland, which has been decimated by the financial crisis, two women who founded one of the few surviving investment firms not to need government assistance, Audur Capital, believe more diversity among the banks would have helped to balance their risk-taking male peers. And in Britain, IHS Global Insight economist told the Washington Post back in February that “Clearly, something needs to change. You can argue that the men have made a right mess of it, and now the ladies should have a go.”
Ferrary’s study, which has set the French papers abuzz, looked at 32 major companies in the CAC40, comparing the ranks of female managers to the performance of the company. He found that in 2008, Hermès was the only large firm whose stock price increased, by 16.8%, and it had the “second largest feminized management,” at 55%. Other firms with high ranks of women managers (Sanofi, at 44.8%; Sodexo, at 43.39%; and Danone, at 38%) all performed better than the CAC40 average. Meanwhile, at large French banks, Ferrary reports, BNP-Paribas has held up best, with a stock decline of 39% and 38.7% of its managers female. Competitors Credit Agricole, where 16% of managers are women, fell 62.2%, while Dexia, whose senior ranks are 28% women, dropped 83%.
I will buy into the idea that women tend to be more risk-averse (or “risk-aware,” as Iceland’s Audur Capital owners put it). In past personal finance reporting assignments, I’ve come across many studies that show that women tend to be more wary of taking risks when it comes to investing their own money. Other studies have shown they tend to be more mindful of risk when negotiating their own compensation, opting for higher base salaries and lower at-risk bonus pay than men. And I fully support that more diversity among the senior ranks produces more varied, open discussions that could lead to smarter bets.
But to say that Hermes or Danone performed better than its peers because women are at the helm, and therefore took fewer risks, is a hard explanation to swallow. A higher presence of women likely meant that Hermes, the high fashion house for both men and women, has a good representation of executives with a mind for what its customers want. The same goes for consumer products maker Danone, whose customers are mostly women, and whose brand management chops have likely attracted more women than the world of high finance.
Perhaps having a higher ratio of women at banks does cool the risk-taking-at-any-cost fervor that helped fuel the financial crisis. Women managers might use the same “risk-aware” approach with their clients’ and institutions’ money as they do with their own. But to base that assumption on the stock performance of a small handful of banks feels simplistic.
What do you think, would more women at the top of banks have averted the crisis?
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