Firms With A Female CEO Have Better Stock Price Performance, New Research Says

Research has claimed that companies with women leaders generally have better performance on the stock market than those headed by men.

S&P Global examined profits and stock value data after 5,825 new executives were appointed—578 of whom were females. Meanwhile, at the end of 2018, there were 6.5 male CFOs for every female in the role. The companies involved in the study were all from America, with the analysis examining corporate data issued from 2002 to May 2019.

As data showed, two years after the new CEO appointment, the share price for businesses that designated female chief executives exceeded those that selected men by a 20% average. When females were designated as chief financial officers (CFOs), companies saw several benefits.

Female leaders proved advantageous

According to the report, women CFOs prompted more price appreciation, better-guarded profitability moats, and produced plenty of risk-adjusted revenues for their companies. Report authors also saw that boardrooms with higher levels of gender diversity led to financial gains for investors.

However, analysts specified that better corporate conduct might not automatically be due to the different steps taken by a female executive. Companies with higher profits quality and lower leverage are those with a culture favorable to appointing females, and that’s what drives these differences.

Looking at financial performance, the president and CEO of S&P Global, Doug Peterson, noted that this study is yet another proof that women render essential and positive value for board leadership and C-suite positions. Clearly, diversity and inclusivity over the C-suite and everywhere else in firms is beneficial to everybody—all workers, businesses, and economies.

Ethan Powell adds something

CEO of non-profit ETF issuer Impact Shares Ethan Powell shared with CNBC via email that S&P’s conclusions were not surprising. Firms that empower women will outperform in the long run as they embrace diversity in thinking and empower stakeholders regardless of their gender, race, or ethnicity. He believes this notion and that it will lead to better-managed companies that have goods and services crossing demographic silos.

The S&P research adds credibility to an earlier published report from Credit Suisse, where researchers at the Swiss investment bank examined data from 3,000 companies all over the globe. They found that firms with more women in their management had greater levels of profitability and outperformed on the stock market.

Similar to S&P, Credit Suisse stated that the cultural aspects and business models of companies that designated females into senior roles were likely to be the driving force behind their stronger business performance, and not just gender diversity itself.