Diversity management

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Center for Advanced Human Resource Studies (CAHRS)

CAHRS Working Paper Series
Cornell University ILR School Year 1999

Wall Street Likes its Women: An Examination of Women in the Top Management Teams of Initial Public Offerings
Theresa M. Welbourne
Cornell University

This paper is posted at DigitalCommons@ILR. http://digitalcommons.ilr.cornell.edu/cahrswp/106

CAHRS / CornellUniversity 187 Ives Hall Ithaca, NY 14853-3901 USA Tel. 607 255-9358 www.ilr.cornell.edu/depts/CAHRS/

WORKING PAPER SERIES
Wall Street Likes Its Women: An Examination of Women in the Top Management Teams of Initial Public Offerings
Theresa M. Welbourne
Working Paper 9 9 – 0 7

Advancing the World of Work

Wall Street Likes Its Women

WP 99-07

WALL STREET LIKES ITS WOMEN: AN EXAMINATION OFWOMEN IN THE TOP MANAGEMENT TEAMS OF INITIAL PUBLIC OFFERINGS

Theresa M. Welbourne Cornell University Center for Advanced Human Resource Studies 393 Ives Hall Ithaca, NY 14853-3901 607/255-1139 FAX: 607/255-1836 tw19@cornell.edu

Working Paper 99-07

http://www.ilr.cornell.edu/cahrs This paper has not undergone formal review or approval of the faculty of the ILR School. It is intended tomake results of Center research available to others interested in preliminary form to encourage discussion and suggestions.

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Wall Street Likes Its Women

WP 99-07

WALL STREET LIKES ITS WOMEN: AN EXAMINATION OF WOMEN IN THE TOP MANAGEMENT TEAMS OF INITIAL PUBLIC OFFERINGS

As part of an overall research project exploring the determinants of initial public offering (IPO) firmsuccess, I examine the effect of having women on the top management teams of IPO firms on the organizations’ short and long-term financial performance. Looking at three different samples, I found that trend data indicate IPO firms are gaining in the number of women they employ in their top management teams (where top management team is defined as those listed in the firm’s prospectus). The results ofthe study reported in this paper suggest one reason why the trend is growing; women appear to have a positive effect on the firms’ short-term performance (Tobin’s Q, which is market price to book value per share), three-year stock price growth, and growth in earnings per share. Pick up any newspaper or popular press magazine and you’re bound to find an article or two (or more) about women inmanagement. Fortune, for example, recently published an issue on the ‘The 50 most powerful women’ (Sellers, 1998). The Wall Street Journal published an article featuring women who are leading successful high technology firms (Schmerken, 1998). These articles tend to feature successful women, tell their stories, and then leave the reader with some type of ‘lessons learned’ or inspirational words forwould-be women executives. Although these types of stories are popular, they say little about the real effect of women in top management on the performance of their organizations. The research that has been done relating firm performance to the presence of women comes from the entrepreneurship field and seems to be focused on women as business owners, rather than women as part of the overallexecutive team (for example, see Brush, 1992; Chaganti & Parasuraman, 1996). To date, the question of how women in the top management teams of corporations affect the performance of those organizations appears to be uncharted territory. And, equally unknown, is the effect that women in top management have on Wall Street’s perception of those firms as investment opportunities. Thus, the purpose of thispaper is to report the results of a study that begins to fill a gap in our knowledge. The study empirically links the presence of women in the top management team to firm performance within a sample of initial public offering (IPO) firms. Although the research lacks the richness and detail that studies profiling successful women provide, the advantage of this work is that it begins to show how...
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