Turns out that many companies who seek to embrace equality by any means could actually be doing their shareholders a disservice. But hey, we thought equality of outcome was a guaranteed fast track to utopia! What happened?

In fact, many companies experience stock price declines when women are added to the board of directors, Bloomberg points out.

An analysis of 14 years of market returns across almost 1,900 companies recently revealed that when companies appoint female directors, they experienced two years of stock declines. Companies saw their stock fall by an average of 2.3% just from adding one additional woman to their board.

Kaisa Snellman, an assistant professor of organizational behavior at INSEAD business school and a co-author of the study said: "Shareholders penalize these companies, despite the fact that increased gender diversity doesn’t have a material effect on a company’s return on assets. Nothing happens to the actual value of the companies. It’s just the perceptions that change.”

The study suggests that investor biases are to blame. The study asked senior managers with MBAs to read fictional press releases announcing new board members. The statements were identical, but for the gender of the incoming director. Participants said that men were more likely to care about profits and less about social values, while women were deemed to be "softer".

Snellman continued: “If anyone is biased, it is the market. Investors should consider organizations that add women and other under-represented groups to their boards because there's a good chance that company is being undervalued.”

Despite this study's findings, other non-academic reports over the years have suggested that diverse leadership results in corporate success. A McKinsey analysis concluded that board diversity correlates with positive financial performance and a 2019 Credit Suisse report noted a "performance premium for board diversity".

These findings have prompted investors like BlackRock to push for diversity on boards. Women now account for more than 25% of board members on the S&P 500 and 20% of boards globally.

“It has become kind of a myth. Add a woman on your board, and a company starts doing better,” Snellman continued.

Results remain mixed when looking into diversity, however. An analysis from September showed share prices rose after companies showed better than average levels of gender diversity. Another study from October found that investors punished companies without female directors after California passed a law mandating that all boards in the state must have one woman by the end of this year. The researchers suspected that the market was reacting to the lack of compliance with the new rules for many companies.

Snellman counted 140 research papers that showed no clear relationship between adding diversity and improving performance metrics.

Snellman concluded: “Just to be very clear, I'm not saying that we should not promote female leaders into senior leader positions. But is there a business case for gender diversity on boards? If you ask an academic, the answer is no.”