Companies with a more gender-balanced leadership have more stable returns. That’s the result of an analysis by Nordea Markets based on a sample of 100 Nordic blue-chip companies that examined how gender diversity affects the performance, and hence value, of large companies.
“We found that the volatility of return on capital was much lower for companies with greater gender diversity in their leadership,” says Johan Trocmé, Director of Thematics in Nordea Research.
The results, reported in the latest issue of Nordea On Your Mind, showed that the companies with the most gender-diverse management had 40 percent lower volatility in ROCE (return on capital employed). The companies in the study with more gender-diverse boards of directors also had significantly lower volatility in returns, although the results were most striking at the group management level.
We found that the volatility of return on capital was much lower for companies with greater gender diversity in their leadership.
- Johan Trocmé, Director of Thematics, Research Insights, Nordea Research
But does gender diversity matter when it comes to value creation?
Yes, says Trocmé, pointing to the broader universe of European small and mid-cap stocks. Nordea Markets found that the top 10 percent of those stocks generating the most stable ROCE outperformed the rest of the total group by 75 percent over 17 years.
“Such massive outperformance in our view suggests that having a lower volatility in return on capital is appreciated and rewarded by equity investors,” Trocmé adds.
The researchers also found that one in three board members of the 100 Nordic blue-chip companies are now female – a doubling from 2004 to 2016, with Norway leading the way after introducing mandatory female quotas over 10 years ago.
And watch the webinar, recorded on 21 February, where Johan Trocmé and Ellen Benktander dive into the report’s main findings:
Previous issues of Nordea On Your Mind:
24 Feb 2018: Nordea On Your Mind: Nordic housing hiccups
18 Dec 2017: Nordea On Your Mind: Capex – a once-in-a-decade opportunity
27 Nov 2017: Nordea On Your Mind – Retail apocalypse: The growth of e-commerce
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