Boards with women in India outperform male-only peers by $14 billion

New Delhi: Indian companies with diverse executive boards outperform their peer companies that are run by all-male boards by USD 14 billion, says a Grant Thornton report.

The study, which covers listed companies in India, the UK and the US, estimates the opportunity cost for companies with male-only executive boards (in terms of lower returns on assets) at a staggering USD 655 billion in 2014 where India's share is USD 14 billion.

The report titled 'Women in business: the value of diversity' scrutinised the financial performance of companies listed on the S&P 500, CNX 200 and FTSE 350.

Analysis of the return on assets ratio (also known as return on investment) showed that, on average, companies with at least one female executive board member outperformed those with male-only boards in each of the three markets analysed.

"Research clearly demonstrates that board diversity is a good thing and companies in India should provide more opportunities to women so that they cannot only become business leaders but at the same time build sustainable businesses and provide different perspectives in corporate decision making, management style and leadership," Grant Thornton India Partner Vidya Rajarao said.

In the US, S&P 500 firms with diverse boards outperformed rivals by 1.91 per cent. In the UK FTSE 350 the gap was 0.53 per cent and 0.85 per cent for the Indian CNX 200 companies.

"This translates into an opportunity cost of USD 567 billion, USD 74 billion and USD 14 billion in each of the three markets respectively - or around 3 per cent of GDP in the UK and US," the report said.

Interestingly, just one in 10 of the companies that the report analysed have women board executives.

"The research clearly shows what we have been talking about for a while: that diversity leads to better decision-making. We only looked at listed companies in three markets and the figures are compelling," Grant Thornton global leader for tax services Francesca Lagerberg said.

Lagerberg said, "in an era when productivity puzzles persist and economies trade within globalised markets, facilitating female participation at a decision making level within companies might just give them a competitive advantage."