Would MF Global Have Failed If More Women Were In Charge?
10:24 am, December 12th | by Amy Tennery
Could the MF Global disaster have been averted, if more women had worked at the firm? It’s a pretty big leap to assume that gender alone could have led to MF Global’s calamities. But new information about the firm’s demise — and recent academic studies about how women function in the business world — suggest that women might have handled things differently.
Take, for example, a piece from Dealbook today that profiles MF Global’s fall, titled “A Romance With Risk That Brought On A Panic.” It paints former CEO Jon Corzine as someone “willing to gamble for a rich payoff.” He’s described as having an “obsession with trading,” someone who would leave meetings abruptly to review the markets, with a passion for high-risk, high-reward moves (to the extent that one has to wonder how much he could have possibly enjoyed his stint in the public sector).
The Dealbook item argues that rampant, “outsize risk-taking” (and “the failure of its watchdogs to curb” that behavior) was a hallmark of MF Global. And it pins a fair bit of blame on Corzine, who, it says, “torpedoed an effort to build a new risk system, a much-needed overhaul, according to former employees.”
Risk! So much risk. And a love of it. And that might just have been the problem. Because women aren’t so wild about risk. And there’s proof to back that up.
Take this study from the University of Essex (recounted in an item this morning from The West Australian) that tested women’s and men’s levels of risk aversion through a “real-stake lottery” among groups of economics students. The results showed that “at all levels women are significantly less likely to take risks for a high reward,” despite the fact that, as the West Australian put it, “the ability to take on risk is richly rewarded in business.”
Of course, there are a few caveats to my theory that MF Global could have fared better with more women around. It’s difficult to say how many women were employed at MF Global during different times in the firm’s life. And it would seem that Corzine may have uniquely bungled this one, where other men could have steered MF Global through the storm. I’m not saying that a woman, by default, would have been a better leader at MF Global.
But when you look at the trend (women who are less likely to take risks) and look at what Dealbook fairly points to as MF Global’s main problem (risk), it’s difficult not to see the correlation there. It’s no wonder then that, per a December 2 SEC filing, the board of directors at MF Global at the time of its bankruptcy filing contained just one woman, Eileen Fusco. She led (wait for it) the MF Global board’s audit and risk committee, members of which, according to a recent story in the Wall Street Journal, tried to raise the alarm over Corzine’s European debt buys on more than one occasion (and were rebuffed, it would seem).
Fusco didn’t comment for the Journal’s story — and there’s no telling whether Fusco, herself, was integral in said alarm-raising. But her lone woman status on the board, the risk-hungry culture at MF Global and the piles of proof that women just don’t take risks as often as men (even with a rich reward dangled in front of them) has to make you wonder: What if there had been more women around at MF Global?