Study: Add women to corporate boards to cut fraud

Fraud decreases when boards of directors contain more women, according to results of a Chinese study, The New York Times reported. This finding aligns with others elsewhere in the world, and suggests policymakers should consider the need for more gender-diverse corporate governance.

"Women are more effective in mitigating both the presence and severity of fraud in male-dominated industries," the study states.

The study examined 1,422 instances of fraud investigated in Chinese companies between 2001 and 2010 and found "strong evidence" that fraud likelihood rises with the level of board domination by men.

One reason for the apparently inverse relationship between fraud rates and board gender diversity is that women may contribute to a more talented board, the researchers noted. Gender diversity also allows for multiple viewpoints, which stimulate discussion. And gender diversity could potentially cause more conflicts and less trust betwen board members, which promotes increased scrutiny and less fraud, the researchers found. Moreover, women were "more likely to adopt a measured expansion rate" that protect shareholders' investments.

The optimal percentage of female representation on boards is 50 percent, the study concluded, which is higher than the average anywhere worldwide, the Times noted.

Women hold only 16.9 percent of board seats at Fortune 500 companies, according to the St. Louis Business Journal, and there are only about 235 vacant board seats in these companies each year. So moving the gender diversity needle on corporate boards may take time.

Review of corporate websites reveals where the needle is now for a small subset health payers. Here are their percentages of female board members:    

  • Aetna: 33.3 percent
  • Cigna: 18 percent
  • Group Health Cooperative (Seattle): 54 percent
  • Harvard Pilgrim Health Care: 46 percent
  • Humana: 10 percent
  • United Health Group (parent company of United Healthcare): 18 percent
  • WellPoint: 20 percent  

For more:
- read The New York Times article
- see the St. Louis Business Journal article