Economic Concerns, Beleaguered Corporations, and Women in Corporate Boardrooms

Abstract

Some say that the Unites States of America is in a recession or even a depression. Large, publicly-held American corporations have struggled in recent months, with many publicly-held corporations losing more than 50% of their market value. Many corporations are reporting impaired or negative earnings and performance numbers, and reports of corporate layoffs, downsizing, and bankruptcies abound. As large corporations are impacted, this has, in turn, impacted smaller businesses that rely on larger corporations as customers, suppliers, producers of inputs, and business partners. Municipalities are also collaterally damaged by corporate struggles, given that floundering corporations often close factories and move to cheaper locations, invest less in local development and non-profit endeavors, and otherwise become less generous corporate citizens. On an individual level, the recent economic challenges faced by large corporations have had dramatic and direct ramifications for many Americans. An overwhelming number of corporate employees have lost their jobs, those who invest in American corporations have experienced huge declines in portfolio values, soon-to-be retirees who are depending on stock investments to fund retirement have had to reconsider the viability of retiring in the short term, and parents who intended to use stock accounts in the near future to fund a child’s college education are considering other alternatives. Corporate financial struggles have become personal financial struggles. Therefore, recent research showing that Fortune 500 corporations that have more women directors achieve, on average, stronger financial performance than corporations without such women leaders should merit close attention. In these difficult financial times, strong corporate performance has particular significance.