Only 3 percent of the companies that went public in the U.S. between 1996 and 2013 were run by female CEOs, according to research highlighted by the Wall Street Journal.
Part of the problem, the researchers posit, could be that few women run venture capital-backed companies, which often end up going public. Women-led companies also get a very small share of venture capital funding, netting 13 percent last year, which was actually a record high and an increase from just 4 percent in 2004.
But bias against women executives from potential IPO investors may also be part of the problem. The Journal notes a forthcoming research paper that found business school students who reviewed public offering prospectuses of the same company but with different genders for the CEO were four times more likely to recommend investing in a male-led company. The lead author told the paper that “a series of unconscious biases kills it for some women” who are struggling to take their companies public.
That bias may play out in the numbers, as companies are more likely to have a female CEO before and after a public offering: 6.5 percent of venture capital-backed companies last year were headed by women, a higher share that those that went public. And larger companies do better, even if they still have a paltry track record: women make up just 14.6 percent of chief executives at Fortune 500 companies, a number that hasn’t budged in four years.
Women are lacking on the boards of companies that go public as well. Twitter and Facebook, which both had high-profile public offerings, went public without any female board members, although Twitter just added the first woman to its board and Facebook has since added two. Among the largest companies, women make up just 17 percent of board members with no progress in eight years.
One way other countries have sought to combat these gender disparities is to enact quotas or targets. Japan’s prime minister recently set a goal of increasing the country’s share of female executives to 30 percent by 2020. The United Kingdom set a goal for 25 percent of board seats to be filled by women by 2015, and it has already seen the numbers shoot up to the highest share of seats held by women ever. Six other European countries have gender quotas, such as Norway’s 40 percent requirement, and Germany is on the verge of creating one as well. After Norway’s quota, women now hold 35 percent of board seats and 18 percent of senior management positions.
The only rules about diversity in the United States, however, are requirements about simply disclosing how companies consider diversity of any kind when selecting their boards. Even so, 60 percent don’t comply with the rules. That lack of diversity, and lack of a robust push toward increasing it, may very well be hurting American companies. A huge body of evidence shows that more diverse leadership produces better results.