Companies with female board members see better stock performance, report says

Houston Business Journal by Molly Ryan, Reporter

If Houston companies need more evidence as to why it is beneficial to have more women corporate directors, they should take a look at the new Credit SuisseResearch Institute report “Gender diversity and corporate performance.”

The report published this week analyzed nearly 2,400 companies with and without board members from 2005 onward. It found that the stock of companies with at least one female board member outperformed the stocks of companies with no female board members by 26 percent over the past six years. Most notably, companies with women on their boards significantly outperformed those without in terms of stock price during the recession.

This result led Credit Suisse to conclude that boards with female members tend to perform best in weak market times. However, if markets improve and companies are less defensive, the report said it is not clear whether companies with female board members would continue to outperform those without.

Still, other statistics gathered in the report supported why women should be on corporate boards. For example, the average return on equity of companies with at least one woman on the board was 16 percent, which is 4 percent higher than companies with no female board members. Also, companies with women board directors had an average net income growth of 14 percent over the past six years compared to 10 percent for companies with no female board directors.

Houston Business Journal research shows that out of the top 100 public companies in the area, 47 do not have any female board members.

In a print story I wrote about this research, many high-powered female board members echoed the findings of the Credit Suisse report, such as the fact that board diversity contributes to a stronger company with more revenue growth and improved problem-solving and leadership skills.

Therefore, the Houston companies without any female board members — including National Oilwell Varco Inc. (NYSE: NOV), EOG Resources Inc. (NYSE: EOG) and Cameron International Corp. (NYSE: CAM) — could be missing out on profits.

Molly Ryan covers manufacturing, technology, the Port and logistics.