NEW YORK and LONDON, Sept. 22,
2016 /PRNewswire/ -- The Credit Suisse Research Institute
released today its bi-annual CS Gender 3000 report reaffirming its
prior findings that companies with a higher participation of women
in decision-making roles continue to generate higher market returns
and superior profits. In addition, the report debunks the "Queen
Bee" syndrome, challenges the notion of the "Class Cliff" and gains
new insights into gender diversity in Venture Capital and
Microfinance.
The report, first launched in 2014, analyzes the Credit Suisse
Gender 3000 (CSG 3000), which encompasses 27,000 senior managers at
over 3,000 companies Credit Suisse analysts cover globally. With
the data provided by the CSG 3000, the report examines whether the
evidence continues to link gender diversity to better performance
and looks specifically at firms with more than 50% female
representation in senior management, Microfinance institutions and
Venture Capital firms.
Debunking the "Queen Bee" Myth
- Do women promote women? The report examines the much debated
notion of a "Queen Bee" syndrome which argues that women who have
made it to senior positions actively seek to exclude other women
from promotions into top management.
- The data in the CSG 3000 disputes this idea; the findings show
that female CEOs globally are significantly more likely to surround
themselves with other women in senior roles. Female CEOs are 50%
more likely than male CEOs to have a female CFO and 55% more likely
to have women running business units.
- These findings also firmly reject the notion of a "Queen Bee"
syndrome in the Microfinance and Venture capital sectors. In fact,
25-30% of microfinance CEOs are women and around 50% of the lending
officers are women. Female led microfinance institutions are
more focused on female clients (59% openly target women
versus 43% for male CEOs), have a greater share of female board
members (44% versus 23%), are more likely to have a female chair of
the board (43% vs 16%), and have more female clients (76% versus
60%). It is clear that female-led microfinance institutions attract
more females in management and more female clients.
- While female representation in partner positions in venture
capital remains very low, VCs founded by women have a much higher
percentage of female partners than the industry average (43% vs.
7-8%). Additionally, female founded VCs tend to invest more in
women entrepreneurs with 17.4% of funding rounds going to female
owned startups vs the industry average of 12%. Women are clearly
supporting and promoting women not only in the corporate sector but
also in the microfinance and VC
worlds.
Outperformance of the 50% Club
- Our proprietary analysis continues to demonstrate that the
higher the percentage of women in top management, the greater the
excess returns for shareholders. Hard metrics of financial
performance have also justified this superior stock market
performance according to the data. From YE13-mid 16, the
outperformance of companies with 25% senior women is a
Compound Annual Growth Rate (CAGR) of 2.8%, 4.7% for 33% and
10.3% for those over 50% compared with a 1% annual decline for the
MSCI ACWI over the same period.
- Sales growth at the 61 companies that make up the 50% club has averaged 8% per year since
2008 vs a slowdown of 20bps for the MSCI ACWI on a fully adjusted
basis. The outperformance continues for EPS growth, although
not as pronounced, with 12% annually vs 9% for MSCI ACWI on a fully
adjusted basis since 2008. Over that time period, Return on
Assets (ROAs) averaged 5.7% for the 50% companies, a 20% premium to
the 4.7% average ROA for MSCI ACWI, while leverage (net
debt/equity) at 34% is 28% lower.
- The report also finds that the market is willing to pay a 19%
premium price to book multiple for club 50% companies with a female
CEO. These companies show Return on Equity (ROE) 19% higher on
average and a 9% higher dividend payout.
Challenging the "Glass Cliff"
- The report also examines the evidence of a "glass cliff" for
female CEOs: the idea that female leaders are appointed to lead
companies as a last resort when all other options have been
exhausted and are thus setup to fail. Evidence suggests that
the share price underperforms (almost 10% annualized) from 8 months
before a female CEO is appointed, while women led companies
outperform between 8 and 12 months after the appointment (14.4%
annualized).
- However, after examining a companies' actual financial
performance, evidence of a glass cliff is mixed. The report finds
no significant difference in company ROE between female and male
CEO appointments and that women are actually appointed to companies
with higher cash flow returns on investments. After examining the
companies' (ROA), firms with male appointments saw a 12% decline
versus 16% for female CEOs over the past 12 months before taking
control, which could explain the greater market underperformance of
companies with female CEO appointments.
- Furthermore, evidence indicates that female CEOs are much more
likely to divest assets after taking over the company than men.
Leveraging Credit Suisse HOLT's analysis of operational success
score for acquisition or divestment, the ability of the acquirer or
divested to improve growth and pricing skill, the analysis
indicates that female CEOs show considerably better operational
success and growth relative to their male counterparts and better
pricing skill when assessing and conducting M&A
transactions.
"Gender diversity in both board and particularly senior
management positions is a tremendous benefit to companies and their
shareholders," said Stefano Natella,
Head of Global Markets Research. "Management manages companies,
while boards supervise them. To understand the full impact of
gender diversity, we need to focus on management. Our proprietary
CS Gender 3000 database allows us to link companies' performance
with their management structure. The data shows that there is a
strong correlation between companies with high levels of diversity
in management and their performance."
The State of Women on Boards and Senior
Management
- Boardroom diversity has increased globally from 12.7% at the
end of 2013 to 14.7% at year-end 2015, a 16% increase in two years
and a 54% increase since 2010. The top 5 countries with the
highest percentage of women represented on corporate boards are
Norway (46.7%),
France (34.0%), Sweden
(33.6%), Italy (30.8%) and
Finland (30.8%).
- However, the findings show that there is no consistent
correlation between higher diversity in the boardroom
and increased participation of women in senior management.
Paradoxically, the efforts made to increase gender diversity
in boardrooms can limit the available female talent in
senior management and hinder expanded
representation for women in executive positions in the
future. The average age of male board members is 60 in
Europe and 64 in the US, which
would signify a retirement position.
Female board members are on average 55 in Europe and 60 in the
US indicating that women in their prime
executive years are being siphoned off into board positions and
away from management roles, where they may have more capacity to
make structural change.
- Female participation in senior management (CEO and those
reporting to the CEO) shows a global average of 13.8%
compared to 12.9% in 2014. However, an exact matched-set data
comparison shows representation has increased
much less from 13.6% to 13.8%. Just 3.9% of CEOs in the CSG
3000 are female, barely unchanged from 2 years ago.
- Women make up 14.1% of CFO positions globally, though it's
highly skewed toward Asia
where they account for 22%. Shared services
remains the main employer of women at senior
levels accounting for 33%
of female management positions globally and underlines how women's
path to the top is still concentrated in that area.
Critically women make up 9.9% of business unit heads (a
traditional Launchpad to senior roles and boardroom positions)
versus 8.5% in 2014, which is an 18% increase. However, with only
one in ten women heading these business units, the current rate of
progress would achieve gender parity by 2070.
For a copy of the report, please see here: The CS Gender 3000:
Progress in the Boardroom.
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial
services providers and is part of the Credit Suisse group of
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bank, Credit Suisse offers clients its combined expertise in the
areas of private banking, investment banking and asset management.
Credit Suisse provides advisory services, comprehensive solutions
and innovative products to companies, institutional clients and
high-net-worth private clients globally, as well as to retail
clients in Switzerland. Credit
Suisse is headquartered in Zurich
and operates in over 50 countries worldwide. The group employs
approximately 47'180 people. The registered shares (CSGN) of Credit
Suisse's parent company, Credit Suisse Group AG, are listed in
Switzerland and, in the form of
American Depositary Shares (CS), in New
York. Further information about Credit Suisse can be found
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