Large-Cap Companies with Women Board Members Outperformed Peers

Credit Suisse Research Institute analyzed the performance of close to 2,400 companies with and without women board members from 2005 onward, and evaluated four key financial metrics:

1. Higher return on equity (ROE): The average ROE of companies with at least one woman on the board over the past six years is 16 percent; four percentage points higher than the average ROE of companies with no female board representation (12 percent).

2. Lower net debt to equity ratio: Net debt to equity of companies with no women on the board averaged 50 percent over the past six years; those with one or more have a marginally lower average, at 48 percent.

3. Higher price/book value (P/BV) multiples: In line with higher average ROEs, aggregate P/BV for companies with women on the board (2.4x) is on average a third higher than the ratio for those with no women on the board (1.8x).

4. Better average growth: Net income growth for companies with women on the board averaged 14 percent over the past six years compared to 10 percent for those with no female board representation.

The report offered seven hypotheses to explain the performance findings, including:

Improved Corporate Governance: Academic research reveals that a greater number of women on the board improves performance on corporate and social governance metrics.

Risk Aversion: The study analyzed the MSCI AC World constituents and found that stocks of companies with women on the board are more likely to have lower levels of gearing than their peer group where there are no women on the board.

Lower relative debt levels have been a useful determinant of equity market out-performance, delivering average out-performance of 2.5 percent per year over the last 20 years and 6.5 percent per year over the last four years.

Gender Diversity and Corporate Performance report

-*What financial results have you observed among large organizations with women board members?

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Blog: – Kathryn Welds | Curated Research and Commentary  

©Kathryn Welds

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One thought on “Large-Cap Companies with Women Board Members Outperformed Peers

  1. Pingback: Genes and Neurotransmitters Influence Investment Risk-Taking: Implications for Taking Career Risks? | Kathryn Welds | Curated Research and Commentary

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