Gender diversity has positive impact on financial performance MSCI study says

Firms which have strong talent management practices and a higher representation of women in their leadership tend to show stronger financial performance, according to a recent study conducted by Meggin Thwing Eastman and Panos Seretis on behalf of MSCI ESG Research.

Analysing the company structure of consumer discretionary, consumer staples and industrials sectors and banking firms in the MSCI World index, the study established a positive correlation between female representation on boards and stronger talent management practises. Companies with more women on boards (at least three or more each year over a two-year period) tended to be have stronger talent management practises such as employee surveys, leadership training programs, workforce diversity, training hours and support for degree programs.

The study established a distinction between talent leaders (those with strong talent management practises) and talent laggards (companies with no evidence of such practises.) It highlighted that talent leaders were far more likely to have significant representation of women on their boards while talent laggards tended to have fewer women in their leadership.

The authors subsequently highlighted that talent leaders tended to have higher levels of productivity growth, return on equity and dividend payouts. “We found that average dividend payout ratios and return on equity figures were consistently higher over three years for the companies with three or more women on their board and leading talent management practices than for those with mostly male boards and lagging talent management practices”.

“These findings may bolster the idea that board gender diversity is a reflection of the attention being paid by companies to human capital recruitment, management and development. Executed effectively, we believe this could contribute to higher long-term value creation by the firm” the authors concluded.

The full report can be accessed here.

ABOUT THE AUTHOR
Mona Dohle
Mona Dohle speaks German and Dutch, she is DACH & Benelux Correspondent for InvestmentEurope. Prior to that, she worked as a journalist in Egypt and Palestine. She started her career as a journalist working for a local German newspaper. Mona graduated with an MSc in Development Studies from SOAS and has completed the CISI Certificate in International Wealth and Investment Management.

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