White Collar | Breaking the glass ceiling is good business
Companies with more female directors tend to have better returns and higher payout ratios
A recent study by Credit Suisse Research Institute shows getting more women on board is not just about gender sensitivity, it also makes perfect business sense.
The report, titled The CS Gender 3000: Women in Senior Management, shows companies with more female directors and senior executives tend to have higher returns and dividend payout ratios.
The study is based on the institute's data on more than 3,000 companies in a wide range of industries and 28,000 senior managers across 40 countries from 2005 to 2013. It shows an increasing number of directors are female globally, but still not that many.
Only 4 per cent of the 3,000 global companies have a female chief executive. Asia-Pacific has a higher percentage of female chief executives at 6.6 per cent, compared with 3.3 per cent in the United States.
The report finds the shares of companies with at least one female director outperformed those of firms led by all-male boards by about 3.7 per cent in 2005 and 2013.
The return on equity of companies with at least one female director stood at 14.1 per cent during the period, beating the 11.2 per cent for those with all-male boards. It jumped to 14.7 per cent for firms with more than 15 per cent women in the top management.
This has made more companies hire women directors, but only slightly so