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Companies with most female leaders do best, study says

Friday, January 29, 2016  
Posted by: Barbara Francella
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Public companies with strong female leadership see a better return on equity than companies with fewer women in top roles, according to a study of 4,200 public companies by investment research firm MSCI.

Companies with at least three women on their board of directors realized a 36.4-percent greater return on equity over a five-and-a-half year period — 10.1 percent versus 7.4 percent — compared to companies with fewer women in top roles, the study showed.

While MSCI doesn’t claim more female leaders cause better financial returns, the study noted that "academic research in management and social psychology has long shown that groups with more diverse composition tended to be more innovative and made better decisions.”

MSCI also found that companies with less gender-diverse boards were more likely to have "governance-related controversies,” such as bribery, corruption and fraud.

Despite the strong business case for women’s leadership, only 15 percent of board seats at the companies MSCI studied were occupied by women last year (up from 12.4 percent the year before.) Approximately 19 percent of board seats at MSCI USA Index companies were held by women, up from 18 percent in 2014.

U.S. companies were far more likely to appoint a female CEO and CFO than their European counterparts, the study said. One-sixth of MSCI USA Index companies had at least one woman serving as CEO or CFO, as of August 15, 2015; at non-U.S. companies, the figure was 11.4 percent.

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