Annalisa Barrett on Board Gender Diversity

Shareowners around the world have been calling on companies to increase gender diversity in corporate boardrooms for many years. Despite the increasing number of studies that show that companies with female directors perform better, there is still a very long way to go before gender parity is reached among corporate directors. This article presents some of the most recent research on the topic and highlights legislative efforts in the United States.


Current Research Findings


Over the past several years, numerous studies have examined links between gender diversity in the boardroom and financial performance. Most recently, MSCI found that U.S. companies which began the five-year period from 2011-2016 with three or more female directors reported, at the median, earnings per share which was 45% higher than those companies which had no female directors at the beginning of the period.[i] In 2014, Credit Suisse found that companies with at least one woman on the board had an average Return on Equity (ROE) of 12.2 percent, compared to 10.1 percent for companies with no directors. Additionally, the price-to-book value of these firms was greater for those companies with women on their boards: 2.4 times the value in comparison to 1.8 times the value for zero-women boards. [ii]


Other studies have focused on the less quantitative features of corporate performance. For example, a 2012 study shows that companies with more women on their boards are more likely to “create a sustainable future” by, among other things, instituting strong governance structures with a high level of transparency.[iii] Importantly, one study found that female directors have improved board governance, risk management, and the board’s willingness to “hold CEOs accountable.”[iv]


Efforts to Increase Gender Diversity in the U.S.


Despite these research findings, fewer than 20 percent of the board seats of S&P 1500 companies are held by women. A study recently found that 17.8 percent of the board seats held by directors serving on S&P 1500 boards are filled by women.[v]   In December 2015, a report by the U.S. Government Accountability Office found that, assuming women join boards in equal proportion to men, this number will likely not reach 50 percent – gender parity – before the year 2054.[vi]


So, what is being done to encourage U.S. companies to increase the number of women on their boards? While other countries have implemented, or are contemplating, quotas to address the issue of gender diversity in the corporate boardroom, the U.S. has been reluctant to do so. At the federal level, a bill introduced last year in the House of Representatives called on the Securities Exchange Commission to, among other things, “establish a Gender Diversity Advisory Group to study and make recommendations on strategies to increase gender diversity among the members of the board of directors of issuers.” [vii]


In addition, a few U.S. states have taken on the issue by passing resolutions calling on the companies in their state to set the standard for board diversity. The first state to act was California, whose legislature passed a resolution (CA SCR-62) calling for the boards of publicly-traded companies in the state to have:

  • at least one female director if the board has fewer than six total directors,
  • at least two female directors if the board has six, seven or eight total directors, or
  • three or more female directors if the board has nine or more total directors. [viii]


Of course, CA SCR-62 was only a resolution, so companies in the state face no legal ramifications if they do not fulfill the resolution’s goal; however, it did set a precedent which other states are following. In 2015, the House of Representatives in Illinois passed HR 0439[ix] and the Senate of the Commonwealth of Massachusetts passed S1007[x], both of which are resolutions that closely mirror the California resolution.


Unfortunately, only about 20 percent of the companies in the Russell 3000 index with headquarters in California met the goals established by CA SCR-62. While the boards of companies based in Illinois and Massachusetts have until 2018 to meet the gender diversity goals outlined in their respective states resolutions, it is likely that many will not do so.


However, the increasingly public efforts of institutional investors and diversity advocacy groups are sure to have a positive impact. As more and more companies reap the financial and nonfinancial benefits of having a diverse board, others will surely follow.





[i] Eastman, M., Rallis, D. & Mazzucchelli, G. (2016). The Tipping Point: Women on Boards and Financial Performance. MSCI ESG Research LLC, retrieved from MSCI website:

[ii] Dawson, J., Kersley, R., & Natella, S. Credit Suisse Research Institute, (2014). The CS Gender 3000: Women in senior management. Retrieved from Credit Suisse AG website:;

See also: Dawson, J., Kersley, R., & Natella, S. Credit Suisse Research Institute, (2016). The CS Gender 3000: The Reward for Change. Retrieved from Credit Suisse AG website

[iii] McElhaney, K. A., & Mobasseri, S. (2012). Women create a sustainable future. Research sponsored by KPMG with Women Corporate Directors, Center for Responsible Business, Haas School of Business, University of California, Berkeley. Berkeley, CA.

[iv] Adams, R., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics94, 291-309. doi: 10.1016/j.jfineco.2008.10.007

[v] McGurn, P. (2017). Board Refreshment Trends at S&P 1500 Firms: 2008-2016. Study conducted by Institutional Shareholder Services Inc. and published by the Investor Responsibility Research Center Institute. Retrieved from the IRRCi website:

[vi] United Stated Government Accountability Office. Corporate Boards – Strategies to Address Representation of Women Include Federal Disclosure Requirements. (2015). Retrieved from GAO website:

[vii] H.R. 4718 – Gender Diversity in Corporate Leadership. Sponsored by U.S. Representative Carolyn B. Maloney (D- NY). Introduced March 7, 2016. Retrieved from the website of the United States Congress:

[viii] Jackson, H.B., Corbett, E., Evans, N., Hancock, L., Liu, C., Pavley, F., Skinner, N., Garcia, C., & Lowenthal, B. Senate of the State of California, (2013). Senate concurrent resolution no. 62—relative to women on corporate boards. (SCR 62).

[ix] Mussman, M., House of Representatives of the State of Illinois. House Resolution 0439 URGE CORPS-WOMEN ON BOARDS (HR 0349)

[x] Spilka, K, Senate of the Commonwealth of Massachusetts (2015). Senate Resolution No. 1007 Resolutions encouraging equitable and diverse gender representation on the boards of companies in the commonwealth. (S1007)


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