The relationship between board diversity and firm performance

Having spent more than 20 years serving in leadership roles, and the past decade as a C-Suite level executive, at innovative global technology companies, Louise has established herself as a key stakeholder in driving digital transformation and ecommerce. Leveraging this experience and her innate strengths as both a key problem solver and strong contributor, Louise brings deep expertise and passion for transforming companies through change leadership, driving results, creating a culture of collaboration and innovation, and building high performing functions to the PayPal leadership team. In addition to her pro bono contributions, including volunteer work with human rights organizations and supporting at-risk children seeking asylum, Louise dedicates her time to offering legal support to women and children victims of domestic violence, and serves as an active supporter of diversity in the workplace. She works enthusiastically to mentor women, both at PayPal and beyond, and is a strong advocate for women in senior leadership and board roles.

The relationship between board diversity and firm performance

August 1, Purpose This appendix does not cover the broad range of benefits of workplace diversity and inclusion; rather, it is a supplement to Quick Take: Why Diversity and Inclusion Matter.

Associated Data

A vast body of research documents the relationship between diversity and improved financial performance. However, it is important to note that research can only establish correlations, not causations, between the two. For companies that would still like to incorporate the bottom line as part of their business case, the table below maps recent studies on this topic.

This list is not exhaustive. Researchers apply a variety of approaches in measuring financial performance and profitability; the indicators presented here offer a few examples. Accounting returns 1 In a meta-analysis of studies on the relationship between women on boards and firm financial performance, researchers discovered a positive correlation between the representation of women on boards and accounting returns.

This correlation is stronger in countries with more robust shareholder protections. In fact, adding any number of women to boards was associated with higher median increases in Earnings Per Share. Researchers measured profitability by using average EBIT margins.

The study found higher levels of diversity in management positions contributes to increased revenue from new products and services.

The study revealed a positive correlation between the presence of women in senior leadership and profitability defined as gross margin and net margin.

The relationship between board diversity and firm performance

This correlation proved stronger for women in executive leadership positions than for women on boards. Researchers from Harvard Business School focused on the venture capital VC industry, in which business decisions and results are clearer to understand.

The relationship between board diversity and firm performance

An examination of demographics and investment decisions among VC firm teams from found that diversity improved profitable investments at the individual portfolio-company level and overall fund returns.

Teams that shared the same ethnicity experienced a lower success rate for investments: Their analysis revealed that having a higher number of women in senior positions contributes to a significantly higher ROA.

Why KPMG? Culture, Benefits, Your Career | KPMG Campus

By replacing just one man with one women on the board or in senior management, firms could experience an 8—13 basis point increase in their ROA. This relationship is even more pronounced in industries that employ more women in their overall workforces: In knowledge-intensive and high-tech industries, this relationship translates into an increase of approximately 30 basis points in ROAs.

Notably, researchers discovered that this association was almost twice as large during the global financial crisis — than in stable market conditions. For every percentage point increase in Black and Latinx representation across NASDAQ-listed tech companies, the industry could experience a three-percentage-point increase in revenue.

The research discovered that increased gender diversity on boards is associated with improved share price performance. Catalyst, Why Diversity and Inclusion Matter: Financial Performance August 1, Our highly experienced and dedicated team of leadership and governance advisors represents a diversity of perspectives.

Their combined cross-functional expertise helps to enhance an organization’s board performance by partnering with board members to proactively plan director and CEO succession, review board effectiveness, design and . As Managing Director and Chief Financial Officer at North Highland, Lauren oversees the financial growth and development for the firm.

As a seasoned CFO, Lauren’s 15 plus years of expertise covers a breadth of corporate finance and strategic planning for high growth environments. the impact of diversity with boards of directors on firm performance. To examine the relationship between board of director diversity and firm performance, we first discuss the concept of diversity and then relate diversity to group.

Corporate governance is the mechanisms, processes and relations by which corporations are controlled and directed. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, .

between board diversity and firm performance, and the possible influence of gender quotas on this relationship. The paper is structured as follows. The following chapter gives an overview of the prior literature.

The trigger for this research will be elaborated and . Jun 18,  · There was a small positive, but not statistically significant, relationship between the percentage female representation on corporate boards and the combined mean of the three firm performance measures; overall mean weighted r, 95% confidence interval, CI [ .

Global Diversity & Inclusion Benchmarks - HR Metrics