When Women Are on Boards, Male CEOs Are Less Overconfident

Several studies suggest that having women on the board results in companies making better acquisition and investment decisions and in less aggressive risk-taking, yielding benefits for shareholders. But what’s less clear is: why does having women in the boardroom lead to such improvements for the firm? New research suggests one potential reason: having female board members helps temper the overconfidence of (mostly) male CEOs, improving overall decision making for the company.

A number of governments (notably those in India, California, and parts of Europe) are pushing for greater female representation in the boardroom. And several studies suggest why: Having women on the board results better acquisition and investment decisions and in less aggressive risk-taking, yielding benefits for shareholders. What’s less clear is why these effects happen.