Gender diversity factors show strong efficacy in equity returns for both US and international markets, and in particular for US large-cap companies, according to Calvert’s research ‘Evaluating the financial materiality of gender diversity factors’.
The study, which examined the financial materiality of five distinct gender-diversity factors, found that for US small-cap companies and non-US markets, board-level gender diversity was the driving performance factor.
Other highlights from the study said revealed that for US large-cap companies, female representation in executive leadership roles was as important as representation on the board.
As far as the sectors were concerned, energy was the laggard, with the lowest female representation on corporate boards and in executive leadership roles while utilities was the leading sector, with the most women on corporate boards and in leadership roles.
“While numerous studies in recent years point to ‘yes’, we decided to put these theories to the test, using rigorous quantitative factors,” said Yijia Chen, ESG quantitative research analyst, Calvert Research and Management, an affiliate of Eaton Vance.
“The research showed that gender diversity can have a significant impact on equity returns. The circumstantial score related to gender and inclusiveness news/issues is one of the major drivers of equity performance for US large-cap companies, while board-level gender diversity helped drive results for US small-cap companies and non-US markets.”
The study used three-year back tests on the materiality of five factors which included:
- Number of female board members;
- Percentage of female board members;
- Number of women in board leadership roles;
- Number of women named executive officers (NEOs); and
- TruValue circumstantial score related to diversity and inclusion news/issues.