Ground-breaking research reveals strong link between diversity in decision-making and business growth prospects
Companies with diverse executive boards outperform peers run by all-male boards according to a new study which covers listed companies in India, the UK and US. Our research estimates the opportunity cost for companies with male-only executive boards (in terms of lower returns on assets) at a staggering US$655 billion in 2014.
Women in business: the value of diversity scrutinises the financial performance of companies listed on the S&P 500, CNX 200 and FTSE 350. Some progress has been made by women at a non-executive level, but our report focuses on whether diverse executive teams - the people involved in day-to-day business operations - outperform male-only peers.
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Analysis of the return on assets ratio (also known as return on investment) showed that, on average, companies with at least one female executive board member outperformed those with male-only boards in each of the three markets analysed.
In the US, S&P 500 companies with diverse boards outperformed rivals by 1.91%. In the UK FTSE 350 the gap was 0.53% and for the Indian CNX 200, 0.85%. This translates into an opportunity cost of US$567bn, US$74bn and US$14bn in each of the three markets respectively - or around 3% of GDP in the UK and US.
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