Companies that employ most women get best returns
[LONDON] Employing more women brings a stock market boost, according to Morgan Stanley research on how diversity links to share prices.
Annual returns for businesses that employ the highest proportion of women were 2.8 percentage points above those for the least diverse firms over the past eight years, the report published Tuesday said.
This outperformance was a global phenomenon, despite big differences in gender equality between regions such as Europe, with nearly a third of board seats taken by women in May 2019, and Japan, with just 5 per cent.
The report adds to growing research that shows diverse workforces improve returns, as regulators and an increasing number of investors around the world push for gender balance in the workplace. The all-male board is now a thing of the S&P 500's past after Copart Inc, the last company in the index without a female director, promoted its chief financial officer in July.
Morgan Stanley researchers examined the percentage of women employed throughout the hierarchy of almost 2,000 companies on the MSCI World index, adjusting for company sector. They found diverse companies outperformed even after controlling for size, yield, profitability and risk.
The trend was most pronounced in companies in developed Asian markets, with stocks ranked in the top third for gender equality outperforming those in the bottom third by 3.9 percentage points per year.
Japan was excluded from this result because the low proportion of female staff made it difficult to make meaningful distinctions between the most and least diverse third of companies. Still, the link held firm, with a 0.8 percentage point annual boost to returns for Japanese businesses in the top half of Morgan Stanley's gender rankings for the country.
In a sign of the difficulties in measuring diversity, only around half of the companies reported on their female managers and lower level employees. Missing data for each company was set to the average for its region and sector in Morgan Stanley's analysis.
BLOOMBERG
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Capital Markets & Currencies
Weaker yen keeps Japanese tourists at home while visitors throng
Wall Street bulls say stock rally can resume even without rate cuts
Powering optimal deals with innovation
Europe: Stoxx 600 logs best day in three months as banks shine
US: Stocks rally after strong tech results
Mixed trading in Asia as investors watch for further macro data; STI down 0.2%