In recent years, the theme of "Women = Company Growth" and "Women are Good for Business" has proliferated, appearing by the thousands on the net, posted on the front of corporate and brokerage sites, the subject of papers by the Harvard B Review, McKinsey, etc.

One of the recent sightings of this particular mythical whale:
http://archive.is/5VOCN

While there are many benefits to increasing gender diversity on corporate boards, including the potential for better shareholder returns, that wasn't the sole reason for the proposal, Fred Pinto, OceanRock Investment's CEO, said while presenting the proposal at the company's annual general meeting on Thursday. "We did this quite simply because it's the right thing to do," he said.

At the core of "Women = Company Growth" is the theme that companies with more women grow faster.

Now, IANAIA (I AM Not an Investment Analyst) and this is not investment advice. However, I hope a professional investment analyst or statistician decides to chip in.

The problems with "companies with more women grow faster" are:
* Correlation is not causality.
* The correlation is cherry-picked. That is, it is a "secondary" and convenient effect of a "primary" correlation: The correlation between small caps and growth rate. In other words, small-capitalisation companies (or, at least, those which survive) generally show higher growth rates than large-capitalisation companies, for the simple reason that it is easier to double revenue from 50 million to 100 million, than to double from 50 billion to 100 billion.

But small-capitalisation companies are also younger, and thus recruit from a candidate pool which is younger and has a higher proportion of "women and minorities", yielding a non-causal correlation. But small-capitalisation companies might still outpace large-capitalisation companies in growth rate, even were they to hire all white males or all female Martians; the growth rate depends upon size, not upon gender.

There is one way to partially test whether this theory is correct: I suspect the correlation studies are between growth of surviving companies and female presence. However, I assume small caps also have a higher failure rate than large caps. If so, then there should be a correlation between female presence and rate of company failure! (Of course, anyone to propose such a study, even as neutral inquiry, would be crucified.)