Study: Female Board Presence Bodes Well for Stocks
by Angela Nazworth | July 31, 2012 12:50 pm
[1]Does gender diversity on corporate boards make a difference when it comes to stock performance? According to a recent study[2] conducted by the research arm of Credit Suisse Group (NYSE:CS[3]), the answer is yes. And the difference is positive.
The global study from Credit Suisse analyzed the performance of about to 2,400 companies with and without female board members over the last six years.
Here are two key findings regarding the correlation between company stock prices and gender-diverse boards:
- Stocks from companies that have at least one female on the board and a market capitalization of $10 billion, outperformed stocks from similar companies with all-male boards by 26% over the past six years.
- The largest difference, however, came after 2008. Having both men and women on the board is apparently better for the bottom line during lean times. “Stocks with greater gender diversity on their boards generally look defensive,” the report’s author, Mary Curtis, said in a press release[4]. “They tend to perform best when markets are falling, deliver higher average return on equities (ROEs) through the cycle, exhibit less volatility in earnings and typically have lower gearing [leverage] ratios.”
The study also found that companies with women board members had the following four traits in common:
- Higher ROE
- Lower gearing
- Higher price/book value multiples
- Better average growth
The impact of gender diversity is a hot-button that’s been pressed and pondered for decades, but research into the matter has increased over the last several years. It’s a global issue that has been receiving more attention in the U.S. lately mostly because we’re in an age where there’s a healthy pipeline of qualified businesswomen[5], yet females hold only around 16% of board seats[6] on Fortune 500 companies.
The complete survey can be downloaded for free from Credit Suisse[7].
- [Image]: https://investorplace.com/wp-content/uploads/2012/07/corp-board.png
- a recent study: https://infocus.credit-suisse.com/data/_product_documents/_articles/360157/cs_women_in_leading_positions_FINAL.PDF
- CS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CS
- press release: https://infocus.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=360157&coid=284071&lang=EN
- healthy pipeline of qualified businesswomen: https://investorplace.com/2012/07/attention-women-how-to-nab-a-high-powered-board-seat/
- 16% of board seats: https://investorplace.com/2012/07/where-are-the-women-board-members/
- downloaded for free from Credit Suisse: https://infocus.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=360157&coid=284071&lang=EN
Source URL: https://investorplace.com/2012/07/stocks-outperform-when-women-are-on-company-boards/