Female leaders and gender-diverse boards are linked to better stock prices and profitability, according to an S&P Global analysis.
Companies with female CFOs generated $1.8 trillion in total excess profits over sector averages during the 17-year study period. S&P believes the study, which incorporates executive data from Russell 3000 companies between December 2002 and May 2019, is one of the most extensive studies of executive gender diversity to date.
Three more key findings:
- Within two years of appointment, female CEOs increased stock prices 20 percent and female CFOs increased prices 8 percent.
- Firms that appointed female CFOs saw a 6 percent increase in profitability within two years of the appointment.
- Greater gender diversity on boards was also associated with greater profitability.
A second part of the analysis focused on identifying the traits that lead to success. S&P used natural language processing to analyze the biographies of the executives in the study, looking for achievements, education and personal traits more commonly associated with success.
S&P found female executives had similar traits to the most successful male executives, suggesting that female executives are held to a higher standard, but that similar traits help both genders succeed.
The findings diverge from previous research that suggested the link between female leaders and higher earnings is related to how women approach investing or other gender-based behavioral differences. Instead, S&P found firms with higher earnings quality and lower leverage are more likely to also have a culture that supports female leadership appointment. In other words, a culture that supports female leadership also supports financial success.
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