Companies with female board members have outperformed companies that had an all-male board by 26 percent over the past six years, according to new research from Credit Suisse. Surprisingly, this financial success was most dramatic when share price performance was volatile -- specifically, from 2008 on.
"Stocks with greater gender diversity on their boards generally look defensive," wrote the study's authors. "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."
What factors drive this boost? The study cites six theories:
- Companies that appoint women to the board are already doing well.
- Diverse teams are more effective, focused and driven than less-diverse teams.
- Women are proficient at coaching, mentoring and defining responsibilities; these skills offer a nice balance in leadership at the board level.
- The number of female graduates has increased and continues to increase.
- Women make most household spending decisions, so they have an especially keen insight into customer preferences.
- Boards with women tend to improve performance on metrics relating to social and corporate governance.
Today, 59 percent of global stocks on the MSCI World Index had women on their boards. This is up from 41 percent in 2005. What reasons would you add to those above?
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