Story at a glance

  • Data from top European companies shows more female employees coincides with better economic performance.
  • No direct relationship between companies' return on investment was established, but increased diversity shows no cost either.

Having more women in leadership roles in major corporations is associated with positive company stock performance, according to new research from banking juggernaut Goldman Sachs.

Examining data from the STOXX 600, a collection of stocks of a group of European companies, researchers found that in 2020, women compose 31 percent of executive board members in STOXX 600 companies, a major lead from the measly 9 percent reported in 2005.

While this is a decidedly positive effect on female representation in business, the report also saw that employing more women across all levels — not just as managers or C-level members — coincided with a higher annualized total return, or a stronger financial performance.


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Looking at women employee counts from 2009 to 2020, the authors only recently saw a decline when charting financial performance over time with the number of women employees: during the COVID-19 pandemic, which catalyzed a global recession due to mass economic shutdowns.

They write that this time period is a likely outlier and does not reflect the value of having more women employees within companies. Similar decreases in company stock performance were also observed during the Great Recession of 2008.

“Whatever time periods we take, the greater the representation of women higher up organisations, the better the performance uplift from having a larger percentage of Women,” the report reads.

Notably, however, the authors caution that correlation does not imply causation, meaning that a direct relationship between the number of female employees at a company and its profitability cannot be established. 

When examining firms’ return on investments (ROE), researchers did not find any relationship between more women and an increase or decrease in ROE. 

The idea that more women leads to better company performance also does not work across all industries. The report singles out the tech sector, which is historically not diverse, as one that did not see any changes in stock with more or less women on the team. 

Still, the authors say that despite the lack of a formal relationship between more women employees and hard data, a more diverse workforce can enhance business performance and confidence in the company.

“More women at all levels does not detract from performance and may well add to it. So taking a moral, ethical stance, has no noticeable cost,” the report concluded.


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Published on Nov 11, 2020