Board gender diversity in stock exchanges

As federal entities are currently dismantling their DEI efforts, I thought it was a particularly apt time to talk about the positive impact that gender diversity on boards can have on organizations. Research suggests that having more women on boards is linked to positive firm performance. The question has always been: why? What is it that women are doing that makes these firms perform better? @ Lingling Pan Gerry McNamara Cynthia E. Devers Lindsey Yonish tackled this question by collecting CEO and board data for all S&P 1500 firms between 2006 to 2019. They looked at the gender composition of each firm’s board of directors and looked to see if the gender diversity of a firm’s board had an effect on CEOs’ strategic attention breadth. The idea here is that women on the board might bring a broader set of or different perspectives to board discussions, resulting in the CEO taking a broader view of the strategic imperatives of the firm. To look at CEO attention breadth, they use the transcripts of quarterly earnings calls with the CEOs and code the discussions for 13 different types of strategic topics. They also looked at how well the stock of the firm did, relative to comparable stocks. They find that having just one woman on a board increases a CEO’s strategic attention breadth, which is then associated with better stock returns. But what’s interesting is that the optimal number of women on a board seems to be at least three; having two on the board does not really result in much of a change to CEO attention breadth as having just one. But once there are three women, CEO strategic breadth expands significantly, with attendant benefits for firm performance. There's some interesting food for thought here on why three seems to be the magic number for number of women in top management teams, but suffice to say, this adds to a growing set of findings that indicate that a token (or even twokenism) isn't sufficient for firms to fully experience the positive (financial) benefits of diversity. Maybe it’s not possible to have formal policies in place to ensure that increasing diversity continues to be a priority at leadership levels, but savvy business leaders – even if not persuaded by a moral case for diversity – should still be motivated to continue pushing to increase diversity in gender representation (as a start in terms of types of diversity) at top leadership levels (but still do it because it's also the right thing to do, ok?)

I've been writing about #genderdiversity for several years, and I'm getting impatient with the same takeaways year after year- that the number of #women in corporate #leadership is inching upward while gender parity at the top remains distant. New research we've just published at S&P Global Sustainable1 asks: What’s the holdup? Ahead of International Women’s Day 2024, we take a deep dive into where women stand in senior and junior roles, revenue-generating positions, and board membership, using data from the Corporate Sustainability Assessment (CSA). Read the research here: https://lnkd.in/egFQvepB Our key takeaways: *Despite corporate attention paid to gender diversity in recent years, progress toward parity in senior roles remains slow; this is true across junior & senior management positions. *Women hold just 29.0% of management roles with a revenue-generating function — the kind of role that can be a stepping stone to the C-suite. This data point sheds light on how the pipeline to the top narrows for women. *Progress is similarly slow in the boardroom, and the data indicates that to make it onto a board, the bar for women is high. Our analysis shows that a larger share of women in board seats have relevant industry experience compared to men on boards. *Looking at the broader workforce, we found that women hold an increasing share of science, technology, engineering or mathematics (STEM) roles in 10 of the 11 sectors analyzed. Only the #energy sector saw this trend reverse in 2023. The healthcare sector has the highest share of women in #stem positions, followed by consumer staples, real estate and financials. Listen to our Women in Leadership series of the ESG Insider #podcast: https://lnkd.in/gFK3_XpD #IWD2024 #investinwomen #inspireinclusion #changepays Jennifer Laidlaw Anders Almtoft Sansanee Dhanasarnsombat Dario Ramírez Sarriés Cornis Van Der Lugt Esther Whieldon Matt MacFarland Lotte Knuckles Griek

"Diversity is a metric, performance is the goal...DEI doesn't derail trains, lack of merit might...Using knowledge, leadership, network, economic interest, and performance - pulled from real data & real directors...who 'merits' a role? - 61% of black women currently on S&P 500 boards in the US have advanced core knowledge of the company industry, compared to 53% for white men - 40% of Asian men currently on S&P 500 boards outperform on TSR and earnings during multiple board tenures, compared to 35% for white men - Overall, women had more knowledge, network power, and equal performance - Men took leadership roles (usually hired by other men) and kept economic interest for themselves - Overall, directors that had 3 of the 5 (knowledge, leadership, economic interest, performance, and network power), the most represented cohort were black men and women at 47% each.... Women and people of color have to outperform to get the same jobs. They have MORE MERIT on average. 'ISS said its shareholder meeting reports published after Feb. 25 will not consider race, gender, or other diversity factors when making director voting recommendations.' Can you imagine if a sports team came out and said, 'we will no longer consider height in our assessment'? Teams operate better with diverse views, experience, backgrounds, cognitions... 2 measures of diversity are race and gender among many. Congrats on removing MATERIAL data points from team assessments!" - Matt Moscardi in 2 back to back calling it out and calling us in posts this week. "ISS and Glass Lewis are by far the largest proxy advisory firms globally in terms of the number of corporate issuers covered, proxy voting recommendations, and the number and size of institutional investors served. Researchers at George Mason University estimate that these 2 firms together have a 97% market share." - Harvard Law School Forum on Corporate Governance: "The Big Thumb on the Scale: An Overview of the Proxy Advisory Industry" "When a proxy advisor issues a recommendation opposing management, its customers are approximately 20 percentage points more likely to also oppose management compared to other investors. Funds that subscribe to both proxy advisors tend to vote more similarly to the recommendations of the advisor whose voting platform they use." - Chong Shu "The proxy advisory industry: Influencing and being influenced" #Business #leadership #Finance #WealthManagement #BoardsofDirectors #innovation #governance #Money #CultureOfMoney *Sources will be added to the thread shortly.

Diversity is vital for any business, with companies often starting their diversity journey by looking at gender equality, which is easier to measure and compare. 🌎👥   Aligned with this, boardroom diversity has become a big focus in the business world. Achieving gender balance in boardrooms is essential not only for enhancing performance, fostering a robust culture and improving governance, but also for raising the visibility of female leaders and bringing new voices to top-level decision making. 👩💼👨💼🗣️   Morgan Stanley Research data shows that companies with a more diverse workforce, particularly with women across all organizational levels, exhibit better financial indicators, with average annual returns between 2011 and 2022 that were 1.2% higher for investors than their less diverse counterparts. 💰💹👏   Additionally, companies with increased boardroom gender diversity are 60% more likely to cut energy consumption and have a 39% greater chance of reducing greenhouse gas emissions and 46% higher probability of lowering water usage, according to FP Analytics. 🔋🌱💧   Despite the increased focus on diversity in C-suites, the appointment of female board directors in Europe's major financial services firms witnessed a notable decline, dropping to 44% in 2023 from 51% in 2022, according to the latest EY European Financial Services Boardroom Monitor. Notably, 31% of listed European financial services companies still fall below the required 40% female representation in their boardrooms, a target set for compliance by June 2026 by the European Commission's European Women on Boards Directive. 😕📉🎯   Fostering gender equality in leadership roles is pivotal for nurturing innovation, propelling growth and cultivating a thriving work culture. Companies that actively embrace diversity and work towards gender balance stand to gain from enhanced decision-making, heightened innovation and strengthened corporate governance. 🚀🌟👍   Diversity in boardrooms isn't just a social imperative, it's a strategic enhancement for decision-making, mitigating the risks of groupthink, according to the UK's Financial Reporting Council. 🧠👥👌   Organizations must intensify their gender diversity initiatives by implementing policies for improved female representation, ensuring equitable pay, establishing robust anti-harassment measures and providing parental support. It is imperative to understand that diversity is not just an ethical obligation, but a powerful business strategy for creating #longtermvalue. 💪🙌🏆   #BoardroomDiversity #GenderEquality #CorporateGovernance #WorkplaceCulture #DEI #DiverseWorkforce #CorporateInclusion https://lnkd.in/gquaQNcv