Why smashing the glass ceiling is good for investors

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August 01 2019
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The investment case for advancing gender equality in corporations is “strong and clear”, according to new research.

In a new study from Calvert Research and Management, it was highlighted that companies prioritising diversity are displaying stronger overall financial performances.

Quoting MSCI research, the report found that companies with at least three women on their boards had median increases of 10 per cent in return on equity (ROE) and 37 per cent on earnings per share (EPS) from 2011 to 2016.

In contrast, those with no women had median decreases of 1 and 8 per cent, respectively, over the same time period.

The Calvert report then drew its conclusions from the Peterson Institute for Economics, which had discovered similar results in an analysis of almost 22,000 firms globally and found a link between higher levels of C-suite management diversity and firms’ profitability.

Yolanda Beattie, the founder of Future IM/Pact, said diversity is the main driving force behind the teams that had found success.

“There’s so much research now that says diverse teams make better decisions,” she explained.

Ms Beattie said that not only does gender diversity matters, so too does diversity of experience and diversity of perspective.

“The teams that know how to get the most out of that diversity outperform,” she continued.

The Calvert Research study follows 2018 McKinsey analysis that found that teams within the top quartile of gender diversity for executive teams were 21 per cent more likely to outperform on profitability and 27 per cent more likely to have superior value creation than their less diverse counterparts.

In Australia, women currently account for 29.7 per cent of all ASX 200 board positions as at 31 December 2018, according to the Australian Institute of Company Directors.

Despite increasing representations on boards, nestegg has previously revealed that you’re more likely to be a CEO if you’re name is Andrew than if you are a woman.

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Nest egg readers also consider investors pilling into small caps.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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