Women Not on Board When Companies Go Public, Study Finds

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By Andrea Vittorio

There were no women on corporate boards at almost half of the 75 biggest initial public offerings in the U.S. in the past three years, a new analysis found.

Another quarter of companies that went public between 2014 and 2016 had only one woman on their boards, according to the research from a group that pushes for gender diversity called 2020 Women on Boards.

“As far as we know, no one has really looked at the gender diversity of IPO companies,” the group’s co-founder and president Malli Gero told Bloomberg BNA. “But what we hear anecdotally is that for new companies, the boards are stacked by VCs [venture capitalists] who put on their friends,” which oftentimes means men, she said.

The vast majority of venture capital goes to companies founded by men, according to research by Bloomberg. Even firms with female senior investing partners aren’t more likely to invest in companies founded by women, another Bloomberg analysis showed.

‘Structural Challenge’

“There’s a structural challenge within the industry that does not support women on boards created by venture capital,” said Charlotte Laurent-Ottomane, executive director of the Thirty Percent Coalition, which advocates for women to hold 30 percent of board seats across public companies.

That’s why the national coalition—whose members include 2020 Women on Boards along with companies, investors and others—is starting to work with private equity and venture capital firms to provide resources that would help them bring more women into dealmaking and onto portfolio companies’ boards.

“If you buy into the business case,” that companies with more gender diverse boards perform better than less diverse ones, “then the investment will have a better return with women on the board,” Laurent-Ottomane told Bloomberg BNA.

For some companies such as GoPro Inc., their boardrooms have become more gender diverse since going public. The number of companies in the study with no female directors dropped from 37 to 22 over time, while the number with one woman rose from 19 to 27 as boards brought on their first female director. But most of the companies, including GoDaddy Inc., still had little to no gender diversity on their boards a year or two later.

Room to Improve

“One or two years out may not be enough time,” Belen Gomez, senior director of research and board services at governance data provider Equilar, told Bloomberg BNA. Gomez said that lack of women on boards could also change as the campaign for more gender diversity spreads from large companies down to smaller and newly public ones.

Equilar’s latest tally shows that women hold just under 16 percent of board seats at Russell 3000 companies, a benchmark for the entire U.S. stock market. 2020 Women on Boards wants women to hold at least 20 percent of directorships by 2020.

Its analysis indicates there is room for improvement. The newly public companies’ boards are relatively small, with an average of eight directors at the time of IPO. More established companies tend to have nine to 12 board members.

“You don’t have to remove a man,” Gero said. “You just have to add a woman or two.”

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

For More Information

The analysis by 2020 Women on Boards is available at https://www.2020wob.com/blog/women-not-present-ipo-company-boards

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