More women on the board leads to better results

2007

Fortune 500 companies with more women on their boards achieve significantly better financial performance than those with male-dominated boardrooms, new research has revealed.

A four-year study by New-York based consultancy, Catalyst, found that corporations with the highest proportion of women on their boards delivered equity returns that were 53 percent higher than those with the lowest representation of women.

Along with return on equity, the report, The Bottom Line: Corporate Performance and Women's Representation on Boards, revealed equally startling differences in companies' return on sales and return on invested capital.

On average, companies with the most women board directors outperformed those with the least by 66 percent for return on invested capital and by 42 percent for return on sales.

Having three or more women board directors appears to be a precursor for notably stronger-than-average performance, the report suggests.

Separate research has found that women executives working in women-led firms earn between 15 and 20 per cent more in total compensation than women working in other firms and that having a woman at the helm of a company is instrumental to the success of other executive women in quantifiable and significant ways.

"Clearly, financial measures excel where women serve on corporate boards," said Ilene H. Lang, President of Catalyst.

"This Catalyst study again demonstrates the very strong correlation between corporate financial performance and gender diversity.

"We know that diversity, well managed, produces better results. And smart companies appreciate that diversifying their boards with women can lead to more independence, innovation, and good governance and maximize their company's performance."