Q.E.D. A More Diverse Group Results in Better Corporate Performance

“Greater diversity in boards and management are empirically associated with higher returns on equity, higher price/book valuations and superior stock price performance,” this from the Credit Suisse Research Institute which analyzed 28,000 executives across 3,000 companies.   The study, The Credit Suisse Gender 3000: Women in Senior Management, measures the benefits of diversity to all stakeholders including corporates, investors and the wider environment.
 
Findings include:
 
·         One beats none.  Companies with at least one woman on their board outperform those with none.
 
·         Diverse boards outperform.  Companies with more than one woman on their board have returned a compound 3.7% excess a year over those that have none.
 
The study is notable too for its qualitative insights:
 
·         Understanding Causality   The study is clear to disavow conclusions about cause and effect.  Do better companies hire more women; do women choose to work for more successful companies; or do women themselves improve companies' performance?  “The most likely answer is all three.”
 
·         Debunking the myth of “no qualified women”  Female participation on mining company boards is particularly low; the justification being they don’t have the necessary certifications.  Yet it turns out only 32% of men on the boards of mining companies have engineering or geology degrees. Even more interesting, there is no correlation between degree-holding engineers and financial performance.
 
·         Eliminating True Barriers  The study dispels the justification of a “natural” gender gap and instead identifies three main obstacles to achieving greater gender diversity: cultural biases, workplace-related biases and structural/policy issues.
 
We congratulate Credit Suisse for this rigorous analysis of the benefit of gender diversity to all stakeholders.