Over the past six years, companies with at least some female board members outperformed those with no women on the board in terms of share price performance, according to a new report from the Credit Suisse Research Institute.
Large firms with at least one woman on the board performed 26 percent better than those with no female representation. Net income growth for companies with females on the board has averaged 14 percent vs. 10 percent for those none.
The surveyed did find “a clear split” between relative performance between 2005-2007 and post-2008. “In the middle of the decade when economic growth was relatively robust, there was little difference in share price performance between companies with or without women on the board,” the report states. After 2008, “volatility increased…(and) stocks with greater gender diversity on their boards generally look defensive: they tend to perform best when markets are falling, deliver higher average returns on investment (and) exhibit less volatility in earnings….”
Women, many recent studies and surveys suggest, possess qualities that make them more thoughtful investors than men. They are more likely than men to express a lack of confidence in their financial knowledge, which translates to a penchant for research. A 2001 survey found that women were unwilling to act on incomplete information, while men were prone to draw quick conclusions that led to hasty action.
Women also tend to be more risk-averse than men. In a Millionaire Corner survey conducted last month, investors were asked in what they would be most likely to invest in times of market uncertainty and volatility. Twenty-three percent of women said money market mutual funds compared to 12 percent of men, while 22 percent of women said FDIC insured deposit products vs. 12 percent of men.
The Credit Suisse study found that sectors that are closer to final consumer demand, such as healthcare and financials, have a higher proportion of women on their boards as do larger companies. Nearly 86 percent of U.S. companies have one or more women on the board, up from 73 percent in 2005.\
Among the factors the study correlates with stronger corporate performance include:
· A better mix of leadership skills
· Access to a wider pool of talent
· A better reflection of the consumer decision-maker
“The more balance on the board brings less volatility and more balance,” the study concludes.