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Gender-diverse boards generate better returns

Companies that boast both male and female directors outperform male-only firms, according to a global investment manager.

Investors would be wise to consider the diversity of the boards on the equity markets given its benefits, a new AMP Capital report says.

“We have found the companies promoting gender diversity at board level benefit from the different perspectives women bring to the table, and this is why it is important for investors to focus on gender diversity,” AMP Capital corporate governance manager Karin Halliday said.

“Gender diversity signals something about a company’s culture. When companies appoint more women to their boards, it shows they are sufficiently motivated about getting the best people that they will look beyond the usual pool of male candidates.”

According to the report, gender-diverse boards generate better return on equity (53 per cent higher), sales (42 per cent higher) and invested capital (66 per cent higher).

“AMP Capital has long argued that investors benefit from digging deeper and looking beyond financial statements when valuing companies,” Ms Halliday said.

“If you accept that a company’s value is largely driven by the actions of its people, it follows that teams best able to generate strong returns for shareholders will be those that are happy, engaged, collectively intelligent and also cognitively diverse.”

Ms Halliday said many male board members recognise the benefits of a gender-diverse board.

“Many male directors tell us that women directors tend to put greater preparation into their attendance at board meetings and after seeing this some, men report they are now also reading the papers in more detail,” she said.

“It has also been mentioned that meetings go longer when women are present. The more diverse the opinions and perspectives represented around the board table, the longer and more robust the discussions, which is pleasing to hear as an investor.

“Boards are also becoming true meritocracies as the white males who have traditionally occupied the majority of board seats now need to compete for roles by proving they are the best person for the job.” 

Gender-diverse boards generate better returns
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