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Women on top boost value

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New research has shown ASX companies that increase female employees in “top-tier” management roles by 10 per cent or more could see a 6.6 per cent boost in market value.

A report released by Bankwest Curtin Economics Centre (BCEC) and the government’s Workplace Gender Equality Agency (WGEA) has revealed a strong causal relationship between an increase in the number of women in key decision-making positions and subsequent improvements in company performance. 

The estimates have been based on WGEA data collected on ASX companies from the last five years. 

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An increase in the share of female top managers by 10 percentage points or more led to a 6.6 per cent projected increase in the market value of ASX-listed companies, worth the equivalent of $104.7 million. 

Increasing female representation on boards led to a 4.9 increase in market value, equivalent to $78.5 million for the average company. 

Appointing a female chief executive in an ASX company led to a 5 per cent increase in market value – worth the equivalent of $79.6 million on average. 

Companies with a female boss also had a 12.9 per cent increase in the likelihood of outperforming the sector on three or more performance and profitability metrics, including return on equity, earnings, sales per worker, return on assets and dividend yield.

Companies that outperformed sector performance benchmarks in the last five years were most likely to have at least a quarter of its board members be women, with only 8.2 per cent having no female board members. 

A fifth (21 per cent) of the companies that outperformed had more than a third of its board members represented by women.

In contrast, among the companies that outperformed, 32 per cent had no women on their boards, while 11.6 per cent had women representing more than a third of its board members. 

Report author and BCEC principal research fellow associate professor Rebecca Cassells said leadership has never been so important, especially when the world is dealing with the fallout of the COVID-19 pandemic. 

“When businesses are looking to a [post-COVID-19 world], our research shows that having a female CEO has the potential to help companies navigate through the crisis,” associate professor Cassells said.

But report co-author and BCEC director, Professor Alan Duncan commented Australian companies still have a way to go to achieve a better gender balance in top roles. 

Only 17.1 per cent of ASX CEOs are women, while 14.1 per cent of chairs are female.

Close to three in 10, 29.8 per cent, of companies have no representation on their board and a similar proportion of companies has no women in key management teams. 

Two-thirds of firms in the construction sector have no female representation on their boards.

“Women are far less likely to be the chair of the board,” he said. 

“While there has been progress towards a 30 per cent target for the share of women on company boards, three in 10 companies in the WGEA dataset still have no female board representation at all. 

“Greater female representation on boards and in senior leadership positions is better for business. Increasing the talent pool and taking into account the experiences and view of a broader group will ultimately lead to better decisions. This is particularly important as we look to rebuild our economy and broaden business and employment opportunities.”

Workplace Gender Equality Agency director Libby Lyons said the BCEC research is a significant contribution to international business case for gender equality. 

“As we snap forward to a [post-COVID-19] economy, this report demonstrates that CEOs and senior executives must include gender equality as they develop recovery plans,” Ms Lyons said.

“Workplace gender equality is not just about fairness, it also has a compelling commercial imperative.”

 

Women on top boost value
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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