Firms with female leaders are more profitable, says report
Firms that have women in leadership roles are more profitable, according to research published by the Peterson Institute for International Economics.
The researchers found that having women in more executive positions was linked to greater profitability, as was having more women on boards of directors. However, having a female chief executive officer had no apparent effect on earnings.
The report notes that boardroom gender quotas also had no impact on performance, but that “the payoffs of policies that facilitate women rising through the corporate ranks more broadly could be significant.”
Marcus Noland, co-author of the report, told the Wall Street Journal: “Really not what matters is having a female CEO. What seems to matter is really having a pipeline and having a large pool of qualified [female] candidates.”
The researchers analyzed over 21,000 firms across 91 countries. Almost 60% of the firms surveyed had no female board members, while around half had no female senior executives.
Nina Smith has written for IZA World of Labor about gender quotas for boards of directors. Noting that the evidence does not support introducing gender quotas on economic grounds, she argues that: “Policymakers may have to change their focus from requiring quotas for the top of an organization to the much broader task of getting a more balanced gender division of careers within the family, for instance by encouraging more fathers to take advantage of parental leave schemes.”
Ghazala Azmat has also written for us about representation of women in decision-making teams. She writes that, while there is evidence that greater gender diversity has a short-term negative impact on firm performance, “The adverse results are explained by changes in the decision-making process and team dynamics, and in some cases by the inexperience of (new) female team members. As gender diversity becomes the norm, these problems may fade.”
The Peterson Institute working paper, Is Gender Diversity Profitable? Evidence from a Global Survey, can be downloaded here.
Related articles:
Gender diversity in teams by Ghazala Azmat
Gender quotas on boards of directors by Nina Smith
Find more IZA World of Labor articles about gender here