Public Opinion

Why aren't more companies cashing in on the benefits of putting women in charge?
Magazine Contributor
3 min read

This story appears in the April 2008 issue of Entrepreneur. Subscribe »

Women are real assets on the management teams of publicly traded companies, according to a 2007 report by Group and Organization Management, which found that women have a positive effect on a firm's short-term performance, three-year stock price growth and growth in earnings per share.

The report speculates that these boons come from better innovation and problem-solving processes that occur in more diverse top management teams. So why are so few women at the helms of publicly traded companies?

"Women seem to be doing a great job starting entrepreneurial firms and growing them, but they may avoid the IPO route, because it leads to changes that don't fit with the reasons they set out to be entrepreneurs in the first place," says Theresa Welbourne, president and CEO of research firm eePulse Inc.

Amy Black, 48, president of HelloWorld, a subsidiary of DigitalFX Networks, says going public was not on the agenda when she and her husband, Craig Ellins, 54, started their subscription-based video, social and business networking website. "We feared we would lose control," Black says. "Then we learned we could go public through a reverse merger and keep control of the company."

The Las Vegas company was listed on the American Stock Exchange in August, and since then, Black has found many benefits to being a publicly traded company, including capital for M&A and better retention of key employees. The company finished out 2006 with $22.8 million in sales.

For Nancy Duitch, 53, founder and CEO of Vertical Branding Inc., a consumer products, branding, marketing and distribution firm, going public became a viable option when the company needed capital to grow. Duitch's Encino, California, company was acquired by an existing public entity, but she says the process was sometimes scary. "I was used to being involved in every decision and had to bring in trusted executives to make those decisions," she says. "It took time for me to let go." Going public brought Vertical Branding the working capital it needed, and within the first nine months, it made an extremely profitable acquisition. The company hit revenue of about $37 million in 2007-up from $23.4 million in 2006.

"Being a woman owner of a publicly traded company can raise some eyebrows," says Black. "But I've found that investors can see and hear my commitment and passion for the company."

What needs to happen to increase the number of women-owned publicly traded companies? Welbourne identifies two factors: First, women-run firms must want to go public, and the keepers of the domain (VCs, angel investors, etc.) must be willing to keep women in the top job; second, women entrepreneurs need to learn more about the IPO process and how it can help them.

Says Duitch, "The public market should embrace women in CEO positions, as they tend to treat their companies in a team-oriented, nurturing manner that leads to positive growth."

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