We are delighted to read this new research by our Corporate Member S&P Global, which has found a correlation between firms with female CEOs and CFOs and the firm’s financial performance.
In one of the most comprehensive examinations, by breadth and time horizon, of gender diversity, to date the study found that while male CEOs outnumber female CEOs by a ratio of 19:1, and 6.5:1 for CFOs, those firms with more women in these key leadership roles consistently outperformed in terms of profitability and shareholder returns.
- The study finds that firms with female CFOs are more profitable and generated excess profits of $1.8T over the study horizon.
- Firms with female CEOs and CFOs have produced superior stock price performance, compared to the market average. In the 24 months post-appointment, female CEOs saw a 20% increase in stock price momentum and female CFOs saw a 6% increase in profitability and 8% larger stock returns. These results are economically and statistically significant.
- Firms with a high gender diversity on their board of directors were more profitable and larger than firms with low gender diversity.
- Firms with female CEOs and CFOs have a demonstrated culture of Diversity and Inclusion (D&I), evinced by a larger representation of females on the company’s board of directors. Firms with female CEOs have twice the number of female board members, compared to the market average (23% vs 11%).
- Analysis of executive biographies suggests that one driver of superior results by females may be that females are held to a higher standard. The average female executive has characteristics in common with the most successful male executives, suggesting that common attributes drive success among males and females, alike. Overall, the attributes that correlate with success among male executives were found more often in female executives. This finding refutes the commonly held belief in ‘token’ female executives.
Click here to read the full study – with thanks to our Corporate Member S&P global for sharing.