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Oct 11, 2017

Women in IR: Diversity points to stock performance, research finds

With institutional investors increasingly looking at board diversity, investment adviser ThirtyNorth Investments has looked at the link between female representation and share price

Companies with 25 percent or more female board representation have better stock market performance records than peers with one female director or fewer, ThirtyNorth Investments managing principal Suzanne Mestayer says in the latest interview in IR Magazine’s Women in IR video series.

ThirtyNorth Investments examined the performance of S&P500 companies over a 10-year period, grouping them based on the percentage of board seats occupied by women, and excluding those companies where there was a corporate action.

The firm found that companies with one or more women on their boards outperformed companies with no female directors over three-, five- and 10-year periods. Those companies with 25 percent or more female board representation delivered the best returns over five- and 10-year periods, bolstering the argument that boards fully reap the benefit of diversity when there is more than one diverse board member.  

Stock performance with varying female board representation, 2006-2015
Level of diversity Three-year performance Five-year performance 10-year performance
Zero women on boards 13.8 percent 11.7 percent 8.8 percent
One or more women on boards 15.7 percent 12.4 percent 9.5 percent
25 percent or more women on boards 15.7 percent 13.9 percent 10.3 percent

Source: ThirtyNorth Investments

The average market cap of a company with 25 percent or more female board representation ($33.5 bn) is more than three times that of the companies that have zero women on boards ($10.3 bn).

ThirtyNorth Investments has used the findings of its research to launch an impact investing strategy, looking to invest in small-, mid- and large-cap companies across the Russell 3000 that have at least 20 percent female board representation and at least one woman in the C-suite.

‘Our goal in doing this is not just to create attention for this topic, but also to create a strategy that fills the need of people who are looking to align their values with their investments…What we’re striving to demonstrate is that financial returns do not need to take a back seat to making impact investments,’ Mestayer tells IR Magazine.

Click here to watch the full video interview with Mestayer of ThirtyNorth Investments.

Click here to subscribe to the full women in IR video series to be notified when new videos are released.

Ben Ashwell

Ben Ashwell was the editor at IR Magazine and Corporate Secretary , covering investor relations, governance, risk and compliance. Prior to this, he was the founder and editor of Executive Talent , the global quarterly magazine from the Association of...