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

Companies with female leaders often perform better on the stock market than those led by men, researchers have claimed.

In a report published Thursday, S&P Global analyzed earnings and share price data following 5,825 new executive appointments, of which 578 were women. The companies included in the analysis were all based in the U.S., with the research looking into corporate data published between 2002 and May this year.

For every female CEO in the U.S. there were 19 male chief executives, while there were 6.5 male CFOs for every woman in the role at the end of 2018, the report said.

In the two years following a new CEO appointment, the stock price for companies that appointed female chief executives outperformed those that appointed men by an average of 20%, the data showed.

When women were appointed as chief financial officers (CFOs), companies saw different benefits, the report said.

“Female CFOs drove more value appreciation, better defended profitability moats, and delivered excess risk-adjusted returns for their firms,” the report said.

In the 24 months following the appointment of a female CFO, these companies outperformed those with newly-appointed male CFOs by 8% on share price returns, the research said. They also outperformed by 6% on profitability in the same period.

“These results are economically and statistically significant,” the report’s authors said of the findings.

They also noted that gender diverse boardrooms led to monetary benefits for investors. Firms with greater levels of gender diversity on their board of directors were more profitable than their more male-dominant counterparts, researchers said.

However, analysts pointed out that better corporate performance might not necessarily be down to the different actions that a female executive would take.

“Our analysis supports that firms with higher earnings quality and lower leverage are firms with a culture conducive to making a female appointment, rather than the premise that stereotypical differences in the actions of the female executives, after their appointment, drive these differences,” the report said.

“As we look at financial performance, this research is yet another confirmation that women provide significant and positive value through C-suite and board leadership positions,” Doug Peterson, president and CEO of S&P Global, said in a press release Thursday. “Diversity and inclusion across the C-suite and throughout companies benefits everyone — all employees, companies and economies.”

Ethan Powell, CEO of non-profit ETF issuer Impact Shares, mentioned in an email that S&P’s findings were unsurprising.

“We believe that companies empowering women will outperform over the long term as they welcome diversity in thought and empower stakeholders irrespective of their gender, race or ethnicity,” he said. “This leads to better run organizations that have products and services spanning demographic silos.”

S&P’s study adds creditability to a report from Credit Suisse published a week earlier. Analysts at the Swiss investment bank analyzed data from 3,000 firms around the world, finding that companies with more female management had higher levels of profitability and performed better on the stock market.

Like S&P, Credit Suisse said the cultural characteristics and business models of firms that appointed women into senior roles was likely to be the driver of their stronger financial performance, as opposed to gender diversity itself.


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