The Economic Impact of Women

Direct Impact of Women in the CEO role

A study by major Finnish bank, Nordea analyzed 11,000 companies and revealed that companies with a female CEO or head of the board of directors had a 25% annualized return over eight years, compared to 11% for the broader worldwide index of firms.42

From Boston-based trading firm Quantopian: Between 2002 and 2014, researchers compared the returns of Fortune 1000 companies led by female CEOs to those of the S&P 500. During that time period, the companies with women at the helm saw returns that were 226% higher.43

Research that examines the relationship between women CEOs and the economy remains slim due to the fact that the low sample size of women CEOs too often invalidates the significance of potential studies.

Direct Impact of Women in the CEO role Women CEOs Advocate for Women and Innovation:

A still-relevant report from Credit Suisse centers on the much debated notion of a “Queen Bee” syndrome, which argues that women in senior positions actively exclude other women from promotions into top management. The report’s findings dispute this and show that female CEOs are much more likely to surround themselves with other women in senior roles. In fact, female CEOs are 50% more likely than male CEOs to have a female CFO, and 55% more likely to have women running business units.47

Research by Deloitte suggests companies with an inclusive culture are six times more likely to be innovative. By staying ahead of changes, they are twice as likely to hit or better financial targets. This means providing female mentors and role models, demonstrating trust (rather than talking about it), creating an environment that encourages collaboration, using technology to break barriers, and sourcing innovation openly.48

Women Leadership Yields Positive Results

The 2019 report looks in detail at gender diversity and family owned companies. It shows how family owned companies, with at least 10% women executives, have out-performed male only companies by around 410 basis points per year since 2014.44

Even Kevin O’ Leary of Shark Tank fame admits preferring to invest in companies helmed by women as he has seen them produce superior returns. Out of more than 40 companies he invested in, about 95% of the women-led companies met their financial targets, compared with just 65% for businesses with male leaders.45

The numbers for women entrepreneurs are striking, according to a 2018 study by BCG46:

  • “Investments in companies founded or cofounded by women averaged $935,000, which is less than half the average $2.1 million invested in companies founded by male entrepreneurs.
  • Despite this disparity, startups founded and cofounded by women actually performed better over time, generating 10% more in cumulative revenue over a five-year period: $730,000 compared with $662,000.
  • In terms of how effectively companies turn a dollar of investment into a dollar of revenue, startups founded and cofounded by women are significantly better financial investments. For every dollar of funding, these startups generated 78 cents, while male-founded startups generated less than half that—just 31 cents.”