A few years ago research from Curtin University found that having more women on boards was a good commercial move for businesses. It found that a 10% growth in female representation in senior leadership is associated with a 6.6% increase in the market value of Australian companies.

“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,” the authors explain. “In this report, we have identified a compelling causal relationship between an increase in the share of women in leadership and subsequent improvements in company performance.”

Female representation

A similar finding has emerged from a second study, from the Complexity Science Hub Vienna (CSH), which found that female board members tend to perform better than their male peers. The researchers compared the financial performance of around 4,000 Japanese firms and their gender balance at the board level.

“This is one of the first large-scale analyses of female board members in Japan, and it’s one of the largest samples ever analyzed for developed economies,” the researchers explain.

The researchers were particularly interested in the professional networks of female board members and assessed which companies hired them and the [slow] increase in the number of female board members during the study period. The results show that women make up just 2% of Japanese boards, which is only a modest increase over the decade studied. Indeed, even in 2022 the figure is only 8%, which is far worse than in western countries.

“Our study shows that even if the number of female board members in Japan is still low, they have started to change their position in the networks of executives. Relatively many female board members have multiple mandates, which made them become more central,” the researchers explain.

Boosting profitability

The results show that companies with at least one female board member seemed to do much better than those without any female board members.

“This result is only significant in the last three years. However, since some previous studies have also found cases where companies with female board members were less profitable than the average, this is still a good result, since our sample size is very large and we can basically rule out negative influences from female board members,” the researchers say.

While the results don’t provide a reason for this boost, the researchers believe that it’s likely to be related to the quality of corporate governance diverse boards provide. The results also suggest that women are quite likely to connect with and support each other, so are more likely to interact when they’re from similar backgrounds.

What’s more, this means that companies with links with other firms with higher levels of female board representation were also more likely to appoint female board members.