Boardroom diversity, a dominant shareholder and digital technology investment rank among the top criteria for mid-market companies outperforming their peers, according to a new study.
>The study of ASX 300+ companies by KPMG Enterprise shows that companies that focus on six key priorities including acquisitions, funding arrangements, and remuneration and tenure, are outperforming the market average.
A key finding around boardroom diversity revealed that just 3 per cent of ASX300+ companies have a female CEO. These companies delivered a 9 per cent increase in revenue as compared to the group-wide average of 0.5 per cent.
Twenty-three per cent of companies in the ASX 200 have female directors on their boards, while only 9 per cent do in the ASX 300+.
“The mid-market sector represents over 65 per cent of the Australian economy and is Australia’s engine room,” KPMG Enterprise national managing partner Rob Bazzani said.
“While companies in this group do not have the same degree of diversity at board and senior executive level, those that do showed better results last year than their competitors. This reinforces our view that a broader range of backgrounds adds value to businesses,” Mr Bazzani said.
According to the study, companies with a dominant shareholder holding more than 50 per cent equity grew revenue in 2016 at 6 per cent, compared to 0 per cent growth for widely-held entities.
Director of KPMG Enterprise Sarah Cain said these priorities provided invaluable insight for investors profiling potential companies to invest in.
“In particular, the shareholder model and the tenure of the chairperson, show us that some of them are acting almost like private companies in a way if they are dominantly held and it’s leading to better implementation of strategy and better financial performance,” Ms Cain said.
“This group of companies that we’ve seen in the mid-cap listed space, we expect many of them to be the ASX 200 of the future and what are they doing to achieve growth and are they doing that in a measured way in accordance to their strategy?”
The study also revealed that entities that completed an acquisition or invested in digital technology recorded a growth in revenue of 11 per cent and 4 per cent respectively.