Study: Companies with female leaders make more money

Paternity leave plays a big role in helping women stay on track

Despite the benefits of having more female executives, women remain underrepresented among senior leaders at most businesses, according to a review of nearly 22,000 publicly traded companies across 91 countries by the nonprofit thinktank Peterson Institute for International Economics and audit firm EY, formerly Ernst & Young.

Researchers counted the number of women among each company's corporate board and C-suite in 2014, as well as whether each company had a female CEO that year. Then, they compared those results with each company's profit margin, attitudes toward women leaders, benefit policies, and diversity initiatives.

Women C-suite members were most strongly correlated with profits among the three groups tracked. Moving from zero to 30% women in these positions correlated to a 15% increase in profitability, according to Marcus Noland, the Pearson Institute's director of studies. 

"There are probably benefits to having some functional diversity embodied in your leadership suite, and when you introduce women that is effectively what you are doing," Noland says.

Paternity leave pays off

Despite the economic benefits of having more female leaders, women remained underrepresented in leadership roles.

Researchers found that about 60% of respondents had no women among their board members and more than 50% had zero female executives. Fewer than 5% had a female CEO.

According to the Peterson Institute review, companies were more likely to have female leaders if they were larger in size, did not hold discriminatory attitudes toward women in leadership, and were located in countries where girls score relatively high on international math assessments.

Researchers also noted that generous paternity leave—but not maternity leave—was correlated with the presence of female leaders. Paternity leave helps families distribute the burden of childcare more equally and allows women to return to work more quickly, Noland suggests.

He encourages businesses to review their recruitment and promotion policies. "If you have a supportive set of policies, [including] paternal leave, which allows women to have children while maintaining their careers in a relatively undisruptive manner, you see more women making it to the very top" (Victor, New York Times, 2/9; Picchi, "MoneyWatch," CBS News, 2/9; Anderson, "The Estrogen Effect," Quartz, 2/8).


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