Why Women-Led Boards Pay Less for Acquisitions

21apr15

Studies have shown that women-led boards make fewer bids for M&A and also pay less for acquired companies. Overall, they make better investment decisions and better acquisitions – but how is this related to having more women in the boardroom?

iKadre specialists already suggested a potential reason: women lead boards temper the overconfidence specific to some male CEOs. Confidence is good, but overconfidence leads to mistakes, such as underestimating the risks related to a merger and acquisitions process and overestimating the returns. These may translate further into high risk-taking and over-investment, which may destroy shareholder value.

Increasing the number of female directors is a great way to ensure diversity of viewpoints and promote better board deliberations. The solutions identified will be more creative. Also, women directors are more willing to express their independent views; they are usually less conformist – probably also because they are not part of old-boy networks.

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