September 21, 2011

Dr. Farrell Speaks at Symposium Examining Representation of Women on Corporate Boards

Dr. Kathleen Farrell, senior associate dean of the UNL College of Business Administration, is a participant in the inaugural Catalyst Corporate Board Governance Symposium hosted by the BMO Financial Group. Catalyst is a non-profit group designed to examine the governance structure of companies, particularly looking at the representation of women in top management and boards, and promoting the idea of women moving up the ranks of corporations.

Farrell is a panelist on a session examining whether gender diversity on corporate boards changes selection dynamics and outcomes when new members are added. Farrell’s 2005 research paper “Additions to Corporate Boards: The Effect of Gender,” co-authored with Dr. Philip Hersch of Wichita State University, remains a highly cited paper by fellow researchers.

“In our research we looked at additions to corporate boards. Whenboards of directors were adding individuals to corporate boards, did the gender of the individual matter in terms of determining whether they are more likely to add a man or woman? Our research focused on that question,” Farrell said.

Farrell found the research interesting, because it looked at the board selection process when a male leaves a corporate board compared to what happens when a female departs.

“Our research showed that the probability of adding at least one female to the board was 11% whereas it was 43% for adding at least one male, if there is no departure from the board. However, the probability of adding a woman to a board if a woman left the board increased to 40%, whereas if a man left, the probability of adding a woman was pretty much unchanged.”

Farrell, who is also a professor of finance at CBA, used data from the 1990’s when conducting the research.

“Obviously. diversity of the board was relevant, but it wasn’t necessarily about adding more diversity. It seemed more about maintaining or making sure you had some diversity.”

Another position Farrell holds which makes her qualified to speak on the topic of gender diversity on corporate boards, is as a current board director at Nelnet in Lincoln.

“I was added to Nelnet’s board along with another woman and we were the first women added to their board. I have had the experience of being part of creating diversity on a board and can talk about the inside perspective of serving on a board.”

From her current position as a board member, Farrell has seen that the skill set that a particular individual brings to the board is critical.

“We look at our Nelnet board and if there’s a certain expertise that is missing, then that’s a critical component of who needs to be the next board member. If you look at when I was added and the woman that was added with me, our skill sets couldn’t have been more different. It was obvious that they were looking for two different types of skill sets but our gender was important also.”

The Catalyst symposium is being held in Toronto from September 21-23. Farrell believes the event will help people better understand the value of women on corporate boards and in top management positions.