Companies with women on their boards performed better in challenging markets than those with all-male boards in a study suggesting that mixing genders may temper risky investment moves and increase return on equity.
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, according to a report by the Credit Suisse Research Institute, created in 2008 to analyze trends expected to affect global markets.
The number of women in boardrooms has increased since the end of 2005 as countries such as Norway instituted quotas and companies including Facebook added female directors after drawing criticism for a lack of gender diversity. The research, which includes data from 2,360 companies, shows a greater correlation between stock performance and the presence of women on the board after the financial crisis started four years ago.
“Companies with women on boards really outperformed when the downturn came through in 2008,” said Mary Curtis, director of thematic equity research at Credit Suisse in Johannesburg and an author of the report. “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.”
While female representation increased to 59 percent last year from 41 percent at the end of 2005, countries such as Japan and South Korea are lagging behind the U.S. and Europe, which has added female representation the fastest over the six-year period.
Larger companies have a higher proportion of women on their boards, as well as those in the health-care industry – 73 percent have at least one female director –and industries close to consumers, the study shows.
The materials and information-technology sectors have the highest percentage of male-only boards, both at more than 52 percent, according the report.