Goldman Sachs: No longer IPOs for companies with all-male boards

Goldman Sachs has announced that as of July 1, 2020, they will no longer take a company public in the U.S. or Europe that does not have at least one “diverse” person on their board of directors. Goldman Sachs Chief Executive Officer, David Solomon, said that the new idea will specifically focus on getting more women on company boards.

In 2021, this new requirement will change to include two diverse board members before taking a company public.

Goldman Sachs looked back over the previous four years, and the performance of IPOs in the United States did significantly better when they had at least one woman on the board of directors when compared to companies that had no women on their board.

According to Goldman Sachs, this new policy will focus on underrepresented groups such as women, ethnic groups, race, sexual orientation, and gender identity.

 

They are not the first investment bank to apply this rule. In 2017, Boston-based investment firm State Street initiated its “Fearless Girl” campaign to pressure companies to add more women to their corporate boards.

State Street reported that more than 300 public companies took this advice and added women to their board of directors. Considering Goldman Sachs is one of the top underwriters of IPOs, their move is expected to make an even larger impact.

This decision comes after last year’s unsuccessful WeWork public offering. Goldman Sachs had valued the company at $47 billion, only to have the anticipated valuation fall to $8 billion. WeWork’s corporate board comprised entirely of men.

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