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Study Finds More Women Board Directors Means Better Financial Performance

Women board directors help to boost financial performance in Fortune 500 companies, according to a new study by Catalyst, a non-profit research and advisory organization that works to expand opportunities for women in business. Examining the financial results of 520 companies over a four-year period, the study found that companies with the highest numbers of women board directors outperformed those with the lowest.

“Bringing women on their boards to represent the stakeholders really gives [corporations] a better company and better performance,” Catalyst President Ilene Lang told Reuters. “We know that diversity, well managed, producers better results,” she said in a statement.

Catalyst’s findings could be cause for companies to rethink gender diversity in the boardroom, according to Forbes. The study, which looked at three financial measures, found that companies with more women directors outperformed companies with fewer by 53 percent in return on equity, by 42 percent in return on sales, and by 66 percent in return on invested capital.

Women are still underrepresented in the boardroom, however, holding just 14.6 percent of board seats in Fortune 500 companies in 2006, the group reports.

Sources:

Forbes 10/1/07; Reuters 10/1/07; Women Board Directors (WBD) Align With Strong Performance at Fortune 500 Companies, Catalyst, 2007

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