As part of the effort to research long-term value creation across the investment value chain, FCLTGlobal has reached a significant and surprising finding: board gender diversity is as important as revenue growth in predicting a company’s long-term success.
This finding could bring about a paradigm shift within global boardrooms and C-suites, where tremendous resources are devoted to generating revenue growth. Meanwhile, FCLTGlobal found that increasing board gender diversity—an action well within corporate leaders’ control—could generate similar results in terms of long-term value creation.
FCLTGlobal’s 2019 research Predicting Long-term Success looks at firms around the world and incorporates metrics not reflected on financial statements, such as board gender diversity. While there are several important dimensions of diversity, including racial, ethnic, and cognitive diversity, this analysis relies on gender diversity due to data availability. FCLTGlobal also conducted a wide review of academic literature and its own data analysis of approximately 2,500 large publicly traded firms gender diversity data back to 2002.
For this analysis, FCLTGlobal defined long-term success as higher 5-year return on invested capital (ROIC). As the McKinsey guide to corporate valuation explains, growth and ROIC drive corporate performance.