A new report, conducted by global financial services firm Morgan Stanley, found that companies that have a balanced workforce of men and women and offer equal pay and work-life balance programs — such as day care and maternity leave — tend to be considered “higher quality” companies and have better returns on equity.
Morgan Stanley found that in the last 10 years, stocks of companies that have more gender diversity have outperformed their lower-diversity peers by 2.3 percent in North America and 1.3 percent in Europe.
The report looked at the gender diversity of more than 1,600 companies in developed markets and ranked them on financial metrics such as profitability and stock performance.
The report found that the companies that scored highest in stock performance and profitability had a large representation of female staff, women in key c-suite positions, more equal pay between men and women, diversity policies, and programs that help women balance personal and professional lives. These companies also tended to have fewer liabilities related to return on equity compared to their lower gender-diversity peers.
“In essence, companies that screen better for gender diversity metrics are higher-quality companies,” Morgan Stanley analysts said. “[They have been] tilted toward high-quality stocks over the past 10 years.”
Analysts also mentioned that companies that didn’t score as high might have the finances to invest in better benefits packages. However, higher-ranked companies tend to consult with and consider a diverse set of perspectives before making strategic decisions, which may have helped put them in better financial positions.
Companies with higher diversity rankings based in the U.S. include Johnson & Johnson, Verizon Communications, Gilead Sciences, and Duck Energy Corp. The lowest-ranked companies for gender diversity based in the U.S. include Consolation Brands, Chipotle Mexican Grill, and Loews Corp.
The report also revealed that the tech industry has the lowest female representation across the globe.