The latest Credit Suisse Research Institute study analyzed the performance of 2,360 companies around the globe with and without female board members from 2005 onwards.
Between 2005 and 2007, when economic growth was relatively robust, there was little difference in share price performance between companies with or without women on the board. On the other hand, from 2008 onwards, as volatility increased, the companies with female board members outperformed the others. “They tend to perform best when markets are falling, deliver higher average ROEs through the cycle, exhibit less volatility in earnings and typically have lower gearing ratios” write the study authors.
Stocks with greater gender diversity on their boards tend to perform best when markets are falling.
– companies may more likely to have women on the board when they are larger and more established;
– diversity increases the performance of all board members. Studies have shown that majority groups improve their own performance in response to minority involvement producing better average outcomes in more diverse environments;
– more women in the group signals a greater collective intelligence.Collective intelligence of a group is not mostly determined by the average or maximum intelligence of the individuals within the group but could be better explained by the style and type of interaction between the group members;
– women are the primary consumer decision makers in homes across the world, having women on the board may guide companies to better products and services for the people who spend household money;
– gender-diverse boards were more likely to focus on clear communication to employees, to prioritize customer satisfaction, and to consider diversity and corporate social responsibility.
A greater number of women on the board improves performance on corporate and social governance metrics.