Women At the Top Equals Corporate Success

January 26, 2004 (PLANSPONSOR.com) - Those companies with the highest representation of women in senior management positions had a 35.1% higher return on equity and 34% higher total return to shareholders than organizations with the lowest women's representation.

Whereas the average company studied had a return on equity of 15.7%, the average return for companies in the top quartile of women’s representation was 17.7%, compared to 13.1% for companies in the bottom quartile of women’s representation.   Comparatively, the average return to shareholders was 109.9%, but 127.7% for the top quartile and 95.3% for the bottom, according to results of the study ” The Bottom Line: Connecting Corporate Performance and Gender Diversity,” released by Catalyst, sponsored by BMO Financial Group.

Financial performance was also examined by industry, and in each of the five industries studied – consumer discretionary, consumer staples, financial services, industrials and information technology and telecommunications services – those companies with the highest women’s representation at the top of the corporate ladder had a higher return on equity than those with the lowest female representation.   In four out of the five industries analyzed, total return to shareholders was higher in firms with the highest women’s representation – the lone exception coming in information technology and telecommunications.

“It is important to realize that our findings demonstrate a link between women’s leadership and financial performance, but not causation,” Susan Black, Catalyst Vice President of Canada and Research and Information Services said in a news release. “There are many variables that can contribute to outstanding financial performance, but clearly, companies that understand the competitive advantage of gender diversity are smart enough to leverage that diversity.”

Industry Breakout

Of the two financial measures, the disparity between those with the highest and lowest women’s representation was particularly elevated in companies in the c onsumer discretionary, consumer staples, and financial services arenas.   These industries in turn represent 11.2%, 11.3%, and 20.7% of the S&P 500 constituency, respectively.

Women’s representation in financial service companies paid higher dividends to the tune of a 29.7% larger return on equity of the companies that were in the top quartile of the 46 financial companies studied.   Similarly, total return to shareholders was 55.2% higher for this group when compared to the bottom quartile.  

Among consumer discretionary companies studied, 64 in all, firms where women occupied more of the senior staff posts had an average return on equity that was 67.8% higher than those companies with the lowest representations.   Disparity in the total return to shareholders was even higher, 208.9%.  

The results among companies in the consumer staples industry was even more telling of the potential for companies with strong women’s representation to return more on the corporate bottom line.   Among the 42 consumer staples included in the study, the return on equity was 147.1% higher and total return to shareholders 229.6% higher for the group of companies with stronger representation of women compared to those companies with the weakest.


To arrive at these figures, the analysis examined the return on equity and total return to shareholders of 353 companies that remained on the Fortune 500 list for four out of five years between 1996 and 2000.   The 353 companies were divided into four roughly equal quartiles based on the representation of women in senior management, positions defined by Catalyst as having day-to-day responsibility for corporate operations, the power to legally bind their companies and represent their companies on major decisions.

The top quartile is the 88 companies with the highest gender diversity on leadership teams. The bottom quartile is the 89 companies with the lowest gender diversity. Catalyst then compared the two groups based on overall return on equity and total return to shareholders.

Among the top quartile of return on equity performers the average women’s representation in the senior management positions was 11%, compared with 9.2% in the bottom quartile performers.   In the total shareholder return winners, the top quartile had women occupying 10.8% of the senior management positions, compared with 9.2% in the bottom quartile representatives.   Across the aggregate, women were found to make-up 10.2% of senior management positions on average.   Industries found to have the greatest representation of women at the top were:

  • Health care – 14.2%
  • Utilities – 12.4%
  • Consumer Discretionary – 11.8%
  • Pharmaceuticals – 11.2%
  • Consumer Staples – 11.1%.

More information and a complete copy of the study are available at  www.catalystwomen.org .