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GVSU Study: Diversity On Corporate Boards Brings Value

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A new study conducted by two Grand Valley State University researchers shows diversity on corporate boards brings value.  WGVU spoke with one of the study’s authors

Two Grand Valley State University researchers recently wrapped up a study: “Representation of Women and Racial Minorities on Fortune 500 Company Boards.”  Professor of economics, Sonia Dalmia and associate professor of economics, Claudia Smith Kelly are the co-authors.  They conducted the research with the help of two student assistants.  It shows that companies with boards made up of at least 25 percent women or minorities are the most profitable.

Here’s Claudia Smith Kelly.

“What we found is that if the CEO of the company is a female and if the CEO of the company belongs to a racial minority, profits tend to be higher than when it’s a male CEO of the company.  We also find, that companies that have 25% of their board members be female or racial minorities, they also perform better.”

Smith Kelly says the purpose behind the study is two-fold.  One, to find out the statistics...   what the numbers say.  Second, the hope is the study will shed the light on the benefits of diversity.

“For years men have been dominating the boards and the CEO positions.  So we are hoping this study will shed some light and also make them more conscious of this fact, make it more aware, so that when they are looking at their boards, they will consider diversity.”

Even with that, the study shows that in spite of increased emphasis on diversifying boards, vacant board seats in 2015-16 were filled mostly by white men.  Currently, about 86 percent of male board members and 82 percent of female board members of Fortune 500 companies are white. 

Smith Kelly says it’s a pilot study, which means they will be continuing their work and expanding the data, which she says will likely occur within the next year.  They’re hoping results might point more women in the direction of attaining CEO and CFO type positions.

Jennifer is an award winning broadcast news journalist with more than two decades of professional television news experience including the nation's fifth largest news market. She's worked as both news reporter and news anchor for television and radio in markets from Grand Rapids and Kalamazoo all the way to San Francisco, California.