Companies with greater participation of women in decision-making roles generate higher market returns and superior profits, a Credit Suisse Research Institute report has said.
“The higher the percentage of women in top management, the greater the excess returns,” said the CS Gender 3000 report which evaluated 27,000 senior managers at more than 3,000 companies globally.
“From year-end 2013 to mid-2016, the ‘out-performance’ of companies with women in 25 per cent of senior positions is a CAGR of 2.8 per cent,” the report said. Companies which with women in 50 per cent of decision-making roles had a CAGR of 10.3 per cent. This compares with the 1 per cent annual decline for the MSCI ACWI (a measure of equity market performance) in the same period.
India saw a decline in management diversity to 7.2 per cent (7.8 in 2014). India is the second-lowest in A-PAC in terms of female representation at a senior management level, behind Japan and South Korea (both at 2.3%).
“Sales growth at the 61 companies that make up the 50% Club has averaged 8 per cent since 2008 as against to a slowdown of 20 basis points for the MSCI ACWI on a fully adjusted basis,” the report said.
“The out-performance continues for EPS growth with 12 percent annually against 9 percent for MSCI ACWI on a fully adjusted basis since 2008,” it added.
As per this report, the market is willing to pay a 19 per cent premium price to book multiple for 50% Club companies with a female CEO. “These companies show REO 19 per cent higher on an average and a 9 per cent higher dividend payout,” the report added.
The report said that the Asia Pacific region had seen significant progress in gender diversity. Of the 1,400 companies analysed in 12 markets there have been considerable improvement with a 60 per cent rise in gender diversity at the boardroom level from 2010 to 2015.
In India, the number of women on boards has doubled from 5.5 per cent in 2010 to 11.2 per cent in 2015, closing the gap with global average of 14.7 per cent.
