Female board members add to bottom line, study shows
Tuesday, August 7, 2012
Public companies with female board members perform
significantly better than those with all-male boards, according to a study by
Credit Suisse Research Institute.
Shares of companies with a market capitalization of more
than $10 billion and with women board members outperformed comparable
businesses with all-male boards by 26 percent worldwide over a period of six
years, the report said.
The number of women in boardrooms has increased since the
end of 2005 as countries such as Norwayinstituted quotas and companies have
added women directors after drawing criticism for a lack of gender diversity. Eighty-six percent of U.S. companies had at least one
woman on their board of directors last year, compared to 59 percent globally,
according to the study. In 2005, only 73 percent of U.S. companies and 41
percent of global companies had women on their boards.
The research, which includes data from 2,360 companies, suggests
mixing genders may temper risky investment moves and increase return on equity.
"Companies with women on boards really outperformed when the downturn came
through in 2008,” Mary Curtis, director of thematic equity research at Credit
Suisse and an author of the report, told Bloomberg Businessweek. "Stocks of
companies with women on boards tend to be a little more risk averse and have on
average a little less debt, which seems to be one of the key reasons why
they’ve outperformed so strongly in this particular period.”
Net income growth for companies with women on their boards
has averaged 14 percent over the past six years, compared with 10 percent for
those with no female director, according to the study, which examined all the
companies in the MSCI ACWI Index.The net-debt-to-equity ratio at
companies with at least one female director was 48 percent, compared with 50
percent at all-male boards.
Larger companies have a higher proportion of women on their
boards, as well industries close to consumer and the health-care industry, the
Consumer and health-care companies "are slightly more
defensive companies anyway, but even within that we found that stocks in the
health-care sector and the consume-staples sector, which had some level of
gender diversity on the board, were generally outperforming their peer group,”