Many of the biggest companies have wholeheartedlyembraced the theory that more diversity means more profits.Investors may be less convinced—at least when itcomes to adding women to boards.

An analysis of 14 years of market returns across about 1,889companies finds that when organizations appointed femaledirectors, they experienced two years of stock declines.The market value of a given company fell an average of 2.3 percentafter it added one additional woman. The research waspublished in the Informs journal OrganizationScience.

Shareholders penalize these companies, despite the fact thatincreased gender diversity doesn't have a material effecton a company's return on assets, said Kaisa Snellman, anassistant professor of organizational behavior at INSEAD businessschool and a co-author of the study.