Companies with more female senior managers perform better, with stock-price returns sometimes more than double that of less diverse companies, the latest update to a key Credit Suisse report confirmed.
"We find clear evidence that companies with a higher participation of women in decision-making roles continue to generate higher returns on equity, while running more conservative balance sheets," Credit Suisse's chairman Urs Rohner, and Iris Bohnet, a public policy professor at Harvard University and Credit Suisse board member, said in the report.
"In fact, where women account for the majority in the top management, the businesses show superior sales growth, high cash flow returns on investments and lower leverage."
The report, which surveyed almost 3,400 companies across all industries and regions, was an update on a study the Swiss bank conducted in 2014.
The authors found that the market put a 19 per cent premium on the price-to-book multiple of companies with a female CEO, with those companies' return on equity averaging about 19 per cent higher and dividend payouts about 9 per cent higher than companies with a male CEO.
And the more senior management roles filled by women, the higher the stock price returns, the report said.
Shares of companies where women make up 25 per cent of senior managers had annualized average stock returns of 22.8 per cent over five years, while those with women in more than 33 per cent of senior management roles had a 25.6 per cent average annualized return, the study found.
Companies where more than half of senior managers were women posted an average annualized return of 28.7 per cent, the report found.
That compared with an 11.7 per cent return on the MSCI All Country World Index over the same period, the report said.
The study created equal-weighted indexes over the 2013-16 period, comprising 1,116 companies with more than 15 per cent female top management, 631 with more than 25 per cent, 317 with more than 33 per cent and 61 with more than 50 per cent.
Based on that index, the study found that from the end of 2013 to mid-2016, companies with women in 25 per cent of senior management roles outperformed by 2.8 per cent on a compound annual growth rate (CAGR) basis, compared with companies that had fewer than 15 per cent female participation or all-male teams.
This number rose to 4.7 per cent for firms with 33 per cent female representation and 10.3 per cent for those with more than 50 per cent female representation, the report found.
The excess compound returns of companies with more than one woman on the board of directors were around 3.5 per cent a year between 2005 and 2015, compared with companies where the board was entirely male.
"The greater the number of women, the better the results," the report said. "There is still a clear opportunity for investors who understand the value creation of diversity."
The report noted, however, that progress in adding women to corporate boardrooms and senior management had been sluggish and, counter intuitively, adding women to the boardroom sometimes resulted in fewer women being chosen for senior management roles.
Women held 14.7 per cent of board seats on a global basis at the end of 2015, up 16 per cent since the 2014 report and 54 per cent since 2010, driven in particular by the introduction of quotas and targets in Europe, the report noted.
But it added that some companies had cut the number of directors on the board to achieve the quota, rather than recruiting more female directors.
Additionally, there were signs that companies may be "overboarding" women executives rather than putting them in senior management opportunities, the report said, in a possible sign that organisations were box-ticking rather than truly embracing gender diversity.
"The central hypothesis behind the analysis in this report is that management manage companies and that boards supervise them," the report said. "Seeing greater diversity in the former rather than purely the latter is the genuine sign of corporate change and a delivery of enhanced corporate performance."
It noted that the average age of male directors was over 60 in Europe and 64 in the US, suggesting that moving to the board was a "retirement" position for men. But the average age of female directors was around 55 in Europe and 60 in the US, which was more aligned with the age of full-time executives.
That indicated that a focus on boardroom diversity tended to reduce the pool of women available for senior management roles, the report said.
That was particularly concerning as it affected the potential pipeline of female CEOs. Women held the top job in just 3.9 per cent of the companies surveyed.