Companies Run By Women Perform Much Better Than Those Run By Men

Companies Run By Women Perform Much Better Than Those Run By Men Hero Image

According to a recent survey by Pew, 80% of people considered women to be just as qualified to lead a company as men. In fact, many said they believed women were actually stronger than men in terms of being compassionate and organized leaders. But somehow, women only account for 4.8% of CEOs at S&P500 companies.

Maybe our perception of women is wrong? Maybe they're not properly equipped to run a major corporation?

Wrong.

A new study conducted by finance technology company Quantopian found that companies run by women performed almost three times as well than those run by men.

For the ongoing project, Quantopian pitted the performance of Fortune 1000 companies that had women CEOs between 2002 and 2014 against the S&P500's performance during that same time period.

They found that cash invested only in Fortune 1000 stocks from companies with female CEOs had a whopping return of 348% over the past 12 years (shown in green on the graph below). And the correlation still held up when they stripped the top and bottom three performers from the female CEO index.

In the same period of time, a hypothetical portfolio made up of stocks from the S&P500 index would have returned just 122% (shown in blue).

At the end of the experiment, the women's fund was calculated to be worth $440,158, while the S&P fund was at $222,306.

Of the female CEOs tracked over those years, the two best performers were Mindy Grossman at HSNi, parent of the Home Shopping Network, and Debra Cafaro at Ventas, a healthcare and senior living real estate investment trust.

"There's a lot of the theorizing around why the results are dramatically higher for the women, but most think it has to do with how hard women have to work to become CEO at such big companies in the first place," project manager Karen Rubin told Fortune magazine. The ones who do "really represent the cream of the crop."

However, she said, some people also theorize that the results are also affected by the types of companies women have typically led — retail, media, and consumer organizations — which saw their stock rise greatly with the recent recovery of the US economy.

As of right now, there's no real answer as to why female-led companies outperform their male-run counterparts. So, the only way to really see how effective women are as high-profile CEOs is to get more of them up through the executive ranks.

(h/t Fortune)

Photo Credit: Getty Images, Graphic courtesy of Quantopian


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