Goldman to Refuse IPOs If All Directors Are White, Straight Men

https://www.bloomberg.com/news/articles/2020-01-24/goldman-rule-adds-to-death-knell-of-the-all-white-male-board

by daegloe • 6 years ago

60 118 6 years ago

bloomberg.com

samdung• 6 years ago

Ok. I'm lost here. What if it's a multi-colored board but all are straight?

oarsinsync6• 6 years ago

The article wording suggests that's fine:

Wall Street's biggest underwriter of initial public offerings in the U.S. will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse.

If I've understood correctly, the requirement is:

NOT (ethnicity=caucasian AND gender=male AND orientation=hetrosexual)

EDIT: Ignore my above, it suggests that no white straight males are acceptable, which is incorrect. See comment below (https://news.ycombinator.com/item?id=22137842)

ForHackernews• 6 years ago

The requirement is

NOT (ALL(d.ethnicity=caucasian AND d.gender=male AND d.orientation=hetrosexual for d in directors))

It's not like Goldman won't do business with any company with straight white men on their board.

johndevor• 6 years ago

How do we know if a board of people are straight or gay? Does everyone have to be out of the closet?

HenryKissinger• 6 years ago

So long, Goldman. It was nice knowing you.

oarsinsync6• 6 years ago

Unlikely, given Blackrock and State Street are apparently leading the way. From the article:

The mandate is the latest in a series of signals that non-diverse boards and management are unacceptable. BlackRock Inc. and State Street Global Advisors are voting against directors at companies without a female director.

BlackRock AUM: ~$6.9T, State Street AUM: ~$2.8T, Goldman Sachs AUM: ~$1.5T.

(Morgan Stanley AUM ~$2T, JPM ~$2.6T)

djohnston3• 6 years ago

That sounds like a lawsuit. Sex, race, AND sexual orientation? Goldman hit the trifecta

oarsinsync6• 6 years ago

Except at least one of those is now enshrined in California law. From the article:

Public companies with all-male boards based in California now face a $100,000 fine under a new state law.

djohnston3• 6 years ago

A Google search indicates California is currently being sued for that law on the ground that it violates equal protection, which seems obvious.

usaar333• 6 years ago

A law which itself has not yet been constitutionally tested and is the subject of lawsuits:

https://www.npr.org/2018/10/01/653318005/california-becomes-...

https://www.washingtonpost.com/business/2019/11/14/this-stat...

brighton362• 6 years ago

How do they plan on verifying orientation?

egdod2• 6 years ago

Or even race, for that matter. What if you have someone who’s 1/1024th diverse like Elizabeth Warren? What if you have someone who’s “transracial”?

thu21116• 6 years ago

Social media and public pronouncements, probably.

This sort of misandrist heterophobia isn't entirely new. I encountered an organisation with the same "no straight white men" policy and the way they did it was by insisting you present evidence of your sexual orientation from Facebook or similar. Really.

brighton362• 6 years ago

That's completely insane.

wakeywakeywakey• 6 years ago

What about Caucasian immigrants? Does my white privilege counterbalance my immigrant struggle?

thrower123• 6 years ago

I'm afraid we're not far off from having to formalize some sort of numerical Diversity Score. Determining position on the totem pole is becoming too complicated.

dextralt3• 6 years ago

Sorry, but no. You may be descendant of Eastern European serfs, you still carry the blood guilt.

busymom02• 6 years ago

I hope this is sarcastic.

nscalf8• 6 years ago

Has there been any studies to determine that a diverse board is actually valuable? I'm genuinely asking, because I subscribe to the "get the best people for the job" theory of doing things. I find it to be racist/sexist/whatever discriminatory word applies to have a hard line in the opposite. In my experience, forced diversity is a good way to shoe horn people into roles they won't be successful in.

None of that is to say that there isn't discrimination, but there is not an equal distribution of individuals in each field.

JumpCrisscross2• 6 years ago

any studies to determine that a diverse board is actually valuable?

At least for gender, the evidence is mixed [1].

It’s a complicated question. For example, the evidence is compelling for French companies [2].

[1] https://hbr.org/2019/03/when-and-why-diversity-improves-your...

[2] https://www.sciencedirect.com/science/article/abs/pii/S03784...

nscalf8• 6 years ago

Ahh that's really interesting, thanks for sharing!

notacoward12• 6 years ago

Also...

https://www.forbes.com/sites/karstenstrauss/2018/01/25/more-...

https://www.fcltglobal.org/news/blog/article/2019/05/28/data...

thu21116• 6 years ago

The PDF for the second paper can be found here:

http://iranarze.ir/wp-content/uploads/2018/08/E8806-IranArze...

There are quite a few problems with this sort of social science study that make it hard to draw any conclusions. You can't simply see mixed answers and say there's mixed evidence, because such answers aren't evidence to begin with.

A first problem is the standard correlation/causation fallacy. If a company that appoints women to the board is doing better is that because of the benign influence of the woman, or is it the inverse, that companies doing well feel they can appoint a token woman without running much risk? Or alternatively that women are only attracted to the sorts of low-risk companies that already do well, and thus success breeds women rather than vice-versa? Or much more likely still that it's irrelevant and there's something else at work?

A second problem is confounding factors. Many studies don't even acknowledge them, let alone control for them. This paper does better than most: it recognises that some studies are confounded because they compare companies across countries that vary in mandatory-women-on-boards-laws, which is a variant of the above problem. It selects a single country and a timeframe when (they assert) there was no social pressure to appoint women to boards. But this paper is nonetheless still ultimately a pure correlation = causation argument.

A third problem is small sample sizes. This paper claims to use a "large" sample but it's only a little under 400 firms. This is far too small to draw meaningful conclusions from, partly because (again) it's too small a set to control for confounding factors. Yet they claim it's statistically significant.

A fourth problem is social scientists are very bad at stopping when they seem to be measuring noise. The paper says:

For the various attributes, we find female directors who are foreigners, have business training, and with longer tenure significantly negatively correlate with all performance measures. However, female directors’ reputation measured by their media coverage is positively perceived by market investors and is associated with an improvement of ROA and ROE.

(ROA is return on assets, ROE is return on equity).

These sentences make a highly implausible claim, namely, the study authors are able to explain movements of the stock market by measuring "reputation" via "media coverage". Moreover that women with more experience and business training are seen as less capable by investors.

But in any other context I think most people would agree that reliably explaining the movement of stocks is extremely difficult, especially for something as abstract and long term as a change of board members. Has a major stock ever had a large movement because a non-chairperson role on a corporate board changed? I'm struggling to think of one. If these authors were really capable of analysing corporate performance in such detailed ways, surely they'd choose to become very successful investors instead of writing gender studies papers?

This sort of study is pretty common and these days I just write it off. It's not so much a problem with this specific subject but more that there is far too much research being done on a dodgy basis. Vast numbers of pseudo-scientists aren't able to step back and say "we aren't able to model this, we don't know the answer to that question". You get studies that sound clever but are just reporting random results.

DuskStar4• 6 years ago

There's also these [0] two [1] on Norway's 2003 requirement for 40% of boards to be women and the 2018 California requirement, which both found that mandating gender diversity on boards had a negative impact on the companies. (This has very little to do with whether a 'naturally' acquired diverse board would be valuable, though)

0: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470

1: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3265783

egdod2• 6 years ago

There are real benefits, but they’re not direct. Basically some companies and government agencies won’t do business with you if your management is insufficiently diverse.

nscalf8• 6 years ago

You could measure that. As far as I can tell, this whole movement of gender and sexual diversity being a key indicator of success in a workplace is entirely devoid of evidence. When did we stop caring about who was good at their job? It is just plainly discrimination against straight white males, isn't that illegal?

VBprogrammer5• 6 years ago

As a white-cis-straight-male I think my opinion on the matter carries little weight. However, the downsides seem pretty minor compared to the opportunities it might open up for the members of those groups.

That said, if I was to put myself in the shoes of an entitled white male CEO I suspect it would take me about 5 minutes to realise that installing a puppet female, gay or minority member of the board would cause almost no real change. I might even make them Chief Diversity Officer or something.

nscalf8• 6 years ago

First off, there is this stupid narrative going around where people of certain groups cannot have opinions on topics involved people of other groups. This is utter nonsense. Everyone is entitled to any opinion they have, and they can talk about it as much as they want.

Second, the downside in the situation you described is having less meaningful insights from your advisors. The impact that good advice could have is enormous, and as far as advisors go, second best advice could be disastrous.

We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is. Why is everyone talking about making the outcome more equal instead of making the decision entirely uncoupled from the non-relevant aspects of the individual?

TotempaaltJ3• 6 years ago

In my experience, forced diversity is a good way to shoe horn people into roles they won't be successful in.

Ideally, this forces people to expand their search/search harder for qualified people. Simply "ticking the boxes" would probably be risky for the company, as you have no idea on if they're the right person.

Right now though, it's too easy to say "we found the most qualified person" while not putting in any significant effort to look outside of the easiest pool of candidates. The easiest pool of candidates isn't distributed equally over several axes (like race and gender), so you're less likely to find candidates from marginalized groups there.

To fix that distribution issue, there has to be a forcing power that requires people to look outside of that easy pool of candidates.

nscalf8• 6 years ago

I'm not sure what you're referring to by "easy pool of candidates". If you post a job listing online and people apply, is that an easy pool? In that situation, is it the responsibility of the company to find more people to apply if they found someone good who could do the job? It sounds like the argument you're making is referring to more diversity earlier in the process, which makes sense to me.

Assuming there is no racial bias in the selection process, if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem?

moduspol• 6 years ago

It's just disappointing they're stopping at requiring only a single diverse candidate! If there's no downside to forcing one, why not two? Or just requiring half of the directors be diverse?

foogazi• 6 years ago

Ideally, this forces people to expand their search/search harder for qualified people. Simply "ticking the boxes" would probably be risky for the company, as you have no idea on if they're the right person.

So “ticking the boxes” is risky, but right now it is too easy to just add candidates?

How can you square those statements?

notacoward12• 6 years ago

Has there been any studies to determine that a diverse board is actually valuable?

Define "valuable" please. Do you mean increasing monetary value for one company in the short term? As it turns out, even that answer seems to be that yes, more diverse boards are valuable. Even more importantly, they're likely to be valuable across all measures (e.g. including worker satisfaction) and all companies in the longer term. Diversity brings perspective, which means better understanding of product opportunities and limitations. It improves connection with equally diverse customers and lower-level employees too. Over time it expands the pool of people who already have the experience and connections to succeed at their next job, and the top N% of a larger pool will outperform the top N% of a smaller one.

There are all sorts of reasons why a "diversity hire" might still be better for a company despite having infinitesimally lower grades at an infinitesimally less prestigious school, so "the best people for the job" probably doesn't quite mean what you think.

VBprogrammer5• 6 years ago

Having a single woman on the board to remind you that having tampons in the woman's bathroom is probably more important than making sure the developers have the exact kind of mechanical switch keyboard and the right variety of arabica beans.

Having a single homosexual person to remind you that having the picture postcard white hetro couple in all of your adverts isn't very inclusive.

Heck, some of these things might even cost you money but they are the right thing to do and requiring one person on the board to have some kind of diversity is an incredibly low bar.

keanzu7• 6 years ago

"get the best people for the job"

Absolutely I want the best person for the job. How do you measure that? What's the metric? Years of experience, years of relevant experience, whether or not it says "Google" somewhere on their resume, height, attractiveness?

Sure some of my examples seem crazy but studies show that taller, attractive people are generally more successful.

There's no accurate measure you can use to assess "best" reliably. A lot of hiring is rather a lot more subjective than anyone admits. Not my employer though, we only hire "the best".

TheAdamAndChe• 6 years ago

Height may be genetic, but attractiveness is associated with discipline. You've got to have the discipline to diet, exercise, and consistently ignore marketing that makes you want to eat more.

nscalf8• 6 years ago

No one reasonably hires without deciding what traits are important for a role. Building a whole new division? You probably want someone with experience in the field, preferably building divisions. Working on maintaining legacy code in a specific language? A domain expert would go far for that. It's not too hard to measure what is valuable for many roles. Beyond all that, best is relative, and an aggregate of all of your skills.

This isn't about hiring "the best", it's about hiring the best that you can find. And evaluating that is totally subjective. But you know what isn't an objective measure of "the best"? If your skin looks different than mine. That's a measure of almost nothing about the quality of your character, work ethic, or intelligence.

Brian_K_White• 6 years ago

There is a fair bit to unpack or interpret in the phrase "be successful in".

humanrebar• 6 years ago

For the purposes of this discussion, do Asians and Jews count as "not diverse"?

It's hard to keep track sometimes.

jjoonathan2• 6 years ago

I think to be maximally inclusive, Asians get a negative diversity score, right?

/s. This is whack.

christiansakai2• 6 years ago

We are dime a dozen lol.

SamReidHughes3• 6 years ago

You should expect the anti-white sentiment to formally mutate to include Chinese/Japanese/Koreans in the future, as they aren't global south enough. (I mean, it already has in college admissions.)

superkuh2• 6 years ago

It's sad to see these kinds of discriminatory practices. Especially when they're backed up with the use of government force. We were supposed to be moving away from judging people based on their skin and sexual preferences.

JumpCrisscross2• 6 years ago

Especially when they're backed up with the use of government force

Goldman Sachs?

superkuh2• 6 years ago

Nah, the California law that would fine them unless they do this.

keanzu7• 6 years ago

“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” ― Martin Luther King Jr. 1963

claudeganon• 6 years ago

I’m at the point now where I’m pretty sure neoliberal-types do this on purpose to push people towards bigotry. No leftist with any coherency to their politics would advocate Goldman Sachs do this (let alone even exist).

Anyway, always worth revisiting the Fields’ sisters book, “Racecraft” about how racial identity is not inherent to people, but imposed as post hoc justification for the socioeconomic order:

https://www.penguinrandomhouse.com/books/233136/racecraft-by...

m0xte• 6 years ago

Whatever happened to merit?

jessaustin3• 6 years ago

TFA is about corporate boards.

dextralt3• 6 years ago

google 'github meritocracy' TLDR, meritocracy is now considered to be a far-right concept.

Stubb• 6 years ago

Was discussing this with a pal yesterday: blockchain-based IPOs just got a whole lot more interesting.

Bantros• 6 years ago

The world we live in

EdwardDiego• 6 years ago

Goldman Sachs makes token motions towards diversity in an attempt to redeem themselves several years after shitting the US economy.

Not sure being "woke" makes up for fucking the US economy, but hey, Twitter seems to bear a disproportionate weight, so I'm not the best arbiter of value.

But this seems like blatant window dressing from a predatory firm.

emilfihlman• 6 years ago

What. The. Fuck.

This is literally insane as a "law" and erodes trust in law.

rzmnzm• 6 years ago

Wow, sexist and racist.

swebs2• 6 years ago

Weird that this is just targeting Europe and North America when they have offices in all major financial centers around the world.

All Asian board in Asia? Fine.

All African board in Africa? Fine.

All European board in Europe? No! That's unacceptable for some reason.

oarsinsync6• 6 years ago

There are a number of female Europeans, as well as non-white Europeans, who may object to your definition that they are not Europeans.

swebs2• 6 years ago

Just prepend "straight, male, ethnic-" to the beginning of each statement. Getting into a pedantic sidetrack isn't helpful. The point remains that there is a crazy double standard going on.

proximitysauce• 6 years ago

A true commitment to diversity would see them putting poor people on the board. A rich person of a different color, gender or sexual orientation is still a rich person. I don’t see this making any kind of material impact on company behavior.

turk73• 6 years ago

So sick of this garbage. White people are not the bane of society, far from it.

Clown world.

I grew up pretty damn poor. Anyone that looked at me as a kid would have said I had no future at all. I picked myself up and worked hard, sacrificed good times, and cut as many financial corners as I could for too many years. It's been a fucking grind. Regardless of my skin color, it was no cake walk, I felt very little "privilege" as the accusation goes. It was just work, endless work. Especially bad was coming behind the Boomer generation that absolutely hated my guts just for being young. You might say mentors were few and far between and every time I reached out, I got my hand slapped. I was looked at (and still am looked at) as a labor commodity and little else.

Also, it is truly hilarous to me that Goldman Sachs, the bank that the US Govt. BAILED OUT during the financial crisis, a bank largely run mostly by people of a certain ethnicity, has any moral standing whatsoever. These fools should be out of business for what they did, not laying down this crap!

Also BlackRock--what a POS company that is! They came in to a well regarded local firm and absolutely gutted it. Want to know why? PENSIONS. They had to get rid of anyone with a pension, so they did all kinds of miserable fuckery to pull that off.

hurricanetc• 6 years ago

Discrimination is discrimination no matter how you dress it up.

corporate_shi113• 6 years ago

And yet a board of all women, all black men, etc. would be celebrated. This is pure racism and sexism.

Unfortunately we live in an age when "white people" and men are unjustly blamed for many things, and the confluence of this blaming culture leads to the demonization of white men. This demonization is encouraged by many in the media, academia and HR departments. It masquerades as virtuous and "progressive" when it is just the opposite. People are reluctant to call it out for what it is because they are afraid of being slandered as racist or sexist.

Policies like Goldman's, while well intended, are ultimately regressive, racist and sexist. When we reduce individuals to their race and gender we fall farther back into the dark ages when these things mattered far more than they do now. Rather than running away from that time towards a world of equality and universal justice, these policies drag us back and breed only resentment and mutual distrust.

dextralt3• 6 years ago

a world of equality and universal justice
resentment and mutual distrust

which of these goals do you think an entity like Goldman Sachs is more likely to pursue?

theredbox• 6 years ago

This is sickening bullshit. I grew dirt poor in Eastern Europe. Some disadvantaged african-american minorities would be considered rich here.

notacoward12• 6 years ago

In case anyone's wondering, Goldman Sachs itself does seem to have pretty decent representation on the board, executive team, and management committee (which AIUI is the real power at that type of company). At least as regards women. I see one black board member and one black MC member, same for Asians, and no indication of gender/sexual preference. You can look for yourself here.

https://www.goldmansachs.com/our-firm/leadership/board-of-di...

forgetfulusr• 6 years ago

Wow, if they even wanted this to be taken seriously they could have just included everyone in on it. Why just this specific class? Refuse anyone that has <same race><same gender><same orientation> on the board. That would have got me atleast thinking about diversity. This just sounds ridiculous.

simonsarris• 6 years ago

This is an extension of the California law to require companies to have women on boards that happened in 2018 which already potentially doubles some board sizes, though I'm not sure how its played out so far.

Anything that forcibly makes boards larger is probably bad for companies, regardless of the goodness of intentions. If you do not believe requirements like Goldman's will increase board sizes, then you must believe that all companies are willing to fire some number of current board members to meet quota, which seems unlikely.

Peter Thiel in Zero to One:

A board of three is ideal. Your board should never exceed five people, unless your company is publicly held. (Government regulations effectively mandate that public companies have larger boards—the average is nine members.) By far the worst you can do is to make your board extra large. When unsavvy observers see a nonprofit organization with dozens of people on its board, they think: “Look how many great people are committed to this organization! It must be extremely well run.” Actually, a huge board will exercise no effective oversight at all; it merely provides cover for whatever microdictator actually runs the organization. If you want that kind of free rein from your board, blow it up to giant size. If you want an effective board, keep it small.

More board members may increase intransigence, decrease oversight (cover over who is really making the decisions and who is not), and turn corps more bureaucratic. Regardless of who is joining the board, this is going to increase board sizes, and that's pretty unfortunate for some philosophies of effective management.

It is not that [xyz] representation isn't a problem, but that an effective company structure must be the foremost requirement, ahead of any other (more arbitrary or ephemeral) requirements. Or else there won't be as many great companies to steward in the first place.

christiansakai2• 6 years ago

Not sure if I will get down-voted with this opinion, blamed for turning a blind eye for a social issue.

But I grew up in Asia (I am Asian). My ethnicity is also a minority there. I came to the US 10 years ago, and had some cultural shock regarding racial and diversity issues.

First, my jokes were mostly offensive to people here. We grew up making jokes about marital status and body image. We told people things like "you're so fat, you need to lose weight", and "why are you still single?" and no one was ever offended. Little did I know that things are different here.

But, the second one was quite surprising. I had a conversation to a female friend. She was telling me that she wanted to go to a business school. I asked why business school, and her another female friend immediately intervened and answered angrily "oh why not? because she is female?" and I was like "what just happened?" because I was confused. That was one instance, and there were other instances where I was accused of "mansplaining". I had to google what that keyword was because I thought I encountered a new English word that I didn't know that I need to add to my vocabulary.

Also during my conversation with (mostly Asian) friends here , they sometimes brought the topic of "Bamboo Ceiling" and I was honestly didn't know what was that about until I googled it.

To be honest (and this is where I think I would be down-voted), I've never experienced such a thing called "Bamboo Ceiling" or I have to be white to be successful (well, the definition of successful varies between people) and I just go on with my life as usual, thinking that such ceiling is just some imaginary ceiling made by my (mostly Asian) friends.

But I do aware of the impact of diversity programs against Asians. We're dime a dozen lol.

busymom02• 6 years ago

Let me preface my comment by mentioning something which shouldn't matter but this news requires it - I am brown. This is one of the stupidest things I have seen come out of the people who think force diversity is a good thing.

Why can't we simply treat people by their character and merit instead of things like race, sex or sexual orientation when those things have nothing to do with whether you can run a business or not? This rule is the definition of racism and sexism. Also how exactly do they plan on figuring out whether someone is straight or not?

As a brown immigrant, I have seen a lot more racism towards white people than others.

keanzu7• 6 years ago

I am brown

"If you’re not prepared to come to that table and represent that voice, don’t come, because we don’t need any more brown faces that don’t want to be a brown voice."

"We don’t need black faces that don’t want to be a black voice"

-Congresswoman Ayanna Pressley, Massachusetts 7th

You have been found guilty of wrongthink, please report to the Ministry of Truth for reeducation.

dang• 6 years ago

Please don't take HN threads further into ideological flamewar.

The GP's comment was fine for HN because it was grounded in specific personal experience. This comment is bad for HN because it's just inflammatory talking points. Please don't do those here.

https://news.ycombinator.com/newsguidelines.html

Custergus• 6 years ago

What constitutes minority? Elizabeth Warren claimed it at around 7%. Obama could play this game either way at 50/50, and if the public restroom standard holds you can claim whatever gender you identify with at the moment. And must a female director resign after a transgender procedure? The world is going mad.

apta2• 6 years ago

Confusing equality of opportunity with equality of outcome I see, amateur mistake.

fairenough42• 6 years ago

Perhaps not a mistake at all. Maybe it's been the point all along but it took a while to get there.

apta2• 6 years ago

What are they getting out of it other than making themselves look foolish?

tuyguntn• 6 years ago

this is bullshit, why CEO can't hire person who is best for the job by her/his own definition of best? Definition of best is determined by person who is hiring.

Can white-man now sue company for racism because board of directors didn't hire him? Does this mean, now minorities are considered as an elite group of people?

P.S. I tried to remember when I last time looked at sex of job applicant. Couldn't remember any case, now I should be careful and reject white man (just in case)

Goldman to Refuse IPOs If All Directors Are White, Straight Men

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