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This is fun

Taste discrimination or rational discrimination?

Boards with more female and ethnic minority directors attract higher levels of activist attacks from hedge funds, according to a new study.

Companies with higher levels of diversity at the top level are more likely to be targeted when their businesses run into issues because boards take longer to make decisions and are less unified, according to research from Rotterdam School of Management (RSM).

The study, which examined hedge fund campaigns in the US over a nine year period, found that companies with diverse boards are much more vulnerable to attacks compared to boards with lower levels of gender and ethnic members.

It’s rational discrimination. They’re not saying that people attack companies with such boards because they’re racist, genderist or whatever. But because mixed boards do less well under attack it is rational to attack mixed boards.

Oh, OK then.

13 thoughts on “This is fun”

  1. My interpretation of this would be that boards perform more poorly when selected based upon diversity criteria instead of merit. Which is a different conclusion than diverse boards performing poorly as a diverse board selected based upon merit could still perform well.

  2. This is softening up – setting the landscape for severe restrictions on Hedge Fund activity being planned by the EU and by extension all the other supranational bodies invested in the ‘DIE’ racket.

  3. An interesting thought Emil. Do they perform worse because they are not selected on the basis of merit.

    I wonder if anyone has examined the evidence on that one?

  4. @ Boganboy
    It is almost a tautology: merit in this case being improving the performance of the company (relative to the absence/non-existence of that director).

  5. Companies with higher levels of diversity at the top level are more likely to be targeted when their businesses run into issues

    Are they also more likely to run into ‘issues’? If they can’t cooperate to fend off Carl Icahn…. And, as Boganboy said, if you select for diversity you cannot be selecting for quality.

  6. I simply guffawed. Virtually all social science is bunk and that’ll include social science that says things that seem plausible to me.

  7. dearime @ 12.24, putting ‘Social’ in front of ‘Science’ is the same as putting ‘Witch’ in front of ‘Doctor’.

    You’d soon find out how supportive of affirmative action these people are by asking if they would like the players in their favourite basketball, cricket, netball, baseball, football (the proper one, or at a stretch, the US version, but definitely not fucking rugby…) / team sport of your choice, to be chosen to meet a quota or based on how good they are.

  8. I suspect that it is because if you (or the existing board, the Chairman, and CEO) have made the effort to recruit a “diverse” board (as above, that has to be at cross-purposes to ‘capable’) you have already signaled your readiness to surrender, making you a more attractive target.

  9. Almost universally, the appointment of a female CEO of a company is a sign of that companies decline. Sell the bloody stock ASAP. The only company I can think of with a decent female CEO is Denise Coates of Bet365, because she went from the cashiers office of a betting firm through all aspects of the business to become CEO.

    Not 100% on merit, because she had family connections and networking, but that’s arguably part-and-parcel of what it takes to be successful nowadays.

  10. You are making me think of the question a bloke asked me. Would I prefer to have the pilot of a plane I’m flying in selected on the basis of merit, or because she had the right coloured skin. Or gender.

    This wasn’t a difficult one to answer.

  11. @BoganBoy – My preference would always be for the maximum of flight hours on that aircraft type. Sex, skin colour, religious preferences and what type of bonus hole you prefer are not really a consideration.

    But we can’t have a straight-forward merit based approach, because that would discriminate against idiots who should be cleaning toilets, not flying planes.

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