Women’s Leadership and Financial Performance: More Good News

The company is more likely to generate good returns if she’s in charge. Image source: Flickr — *The company is more likely to generate good returns if she’s in charge. Image source:* *Flickr*

Investment research firm MSCI has analyzed the 2,400 companies in its World Index and concluded the same thing as everyone else: companies with more women in leadership perform better financially.

The firm separated out companies that have “strong female leadership” from the rest of its index, defining “strong female leadership” companies as either: a) having three women on the board of directors; b) having a percentage of women on the board that is above the average for its country, or c) having a female CEO and at least one woman on the board. They found that companies with strong female leadership generate a Return on Equity of 10.1 percent per year, compared with 7.4 percent for companies without strong female leadership.

MSCI isn’t ready to claim there is a clear causal link between leadership diversity and financial performance just yet, but they did find that companies with less board gender diversity tend to encounter more governance-related controversies. (So much for women being the dramatic ones!) Their full report also lays out two approaches for accelerating our progress towards having women make up 30 percent of board director seats globally (they think we can get there by 2020).

About the Author

Julianne Helinek is Take The Lead's blog editor and writer of the newsletter Take The Lead This Week. She thinks the women she knows are too talented not to be running the world, and she’s especially interested in bringing more men into the gender equality conversation. Julianne is an MBA student at NYU’s Stern School of Business. For more on feminism in the business school world, follow her on Twitter at @thefeministmba.