Companies with women board members may have an edge in performance and stock price

"Mining the Metrics of Board Diversity" analyzes the effect of women on corporate boards
A pedestrian walks through light streaming through colored windows at the Montreal convention center, March 19, 2005.
REUTERS/Shaun Best

Our latest study, "Mining the Metrics of Board Diversity," tracks the progression of women on corporate boards around the world, and reveals how the increase in the number of women on boards affects organizations’ performance. The study is based on data from Thomson Reuters ASSET4 ESG database, which provides in-depth environmental, social and governance information enabling socially responsible investment analysis. The ESG database contains information on 4,300+ global companies and over 750 data points covering every aspect of sustainability reporting.

According to the study, on average, companies with mixed boards have marginally better, or similar performance to a benchmark index, such as the MSCI World, particularly over the past eighteen months. Companies with no women on their boards underperformed relative to organizations with women board members, and had slightly higher tracking errors, indicating potentially more volatility.

"Over the past five years significant measures have been put into place to help increase equal opportunity and diversity, and while there has been a gradual increase in the percentage of companies that have women on boards, there is still a long way to go," says Andre Chanavat, product manager, Thomson Reuters Environmental, Social & Governance (ESG). "This study suggests that the performance of companies with mixed boards matched or even slightly outperformed companies with boards comprised solely of men, further reinforcing the idea that gender equality in the workplace makes good investment and business sense."

From 2008 to 2012 there has been slow but steady growth in the adoption of policies and processes to promote gender diversity and equal opportunity. Recent progress is particularly significant in the Americas, even without legislation or quotas. Global trends indicate a gradual increase in the percentage of companies that have women on their boards, with 59% of companies reporting women board members, up from 56% in 2008. Seventeen percent of the companies analyzed report having a board consisting of 20% or more women (compared to 13% in 2008); 45% report boards of 10% or more women (compared to 39% in 2008). From a regional perspective, EMEA has the most women on corporate boards followed closely by Americas, whilst companies in the Asia Pacific region report having the least gender diverse boards. Sector trends indicate that companies within the technology, industrials and non-cyclical consumer goods and services sectors lead in having the most mixed boards, whilst healthcare companies have the least.

This study complements Thomson Reuters February 2012 "Women in the Workplace" analysis, which revealed that corporations were doing more to track the number of women they employ. Those corporations that recorded more women at managerial levels appeared to benefit from healthier share prices in times of market turmoil.

Read the "Mining the Metrics of Board Diversity" report.