Conversely, if shareholder activism results in good governance and it doesn't result in greater board diversity, what does that say about diversity?
Shareholder activists say they shake up companies by bringing in new, better ideas. What they don’t bring, it turns out, is women. Or people of color.
Firms targeted by activists end up with more white men on their boards, often replacing women and minorities in the process, according to a study by proxy voting firm ISS. The researchers looked at 380 board seats spread across 93 companies in the Standard & Poor’s 1500 Index targeted by activists between 2011 and 2015.
A separate Bloomberg News analysis of the same period found that five of the biggest U.S. activist funds sought 174 board positions on Standard & Poor’s 500 companies in the same period but nominated women only seven times.
The ISS study -- which looked at directors nominated by dissidents and by the boards themselves in response to activism -- found that women made up 8.4 percent of this group, compared with 25 percent of new directors at all S&P 1500 companies in 2015. People of color accounted for fewer than 5 percent, compared with 13 percent of new S&P 1500 directors that year.
In other words, boards not subject to an activist campaign were more likely to increase board diversity.