A new study shows that share prices are boosted by gender diversity

A Stanford Graduate School of Business published study has shown that gender diversity helps boost share prices.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A Stanford Graduate School of Business published study has shown that gender diversity helps boost share prices.

According to reporting by the Business Insider, researchers at Stanford, Northwestern, Dartmouth, and the Hong Kong University of Science and Technology utilised two field studies and an experiment to test correlation between a company's share price and gender diversity.

The results of their studies showed that increased gender diversity helped the share prices on the day of tech companies and financial companies announcing higher-than-expected gender diversity.

Part of the study was asking people with managerial experience to make a bet about what a share price would do when a company revealed better-than-expected gender diversity. The result was that those people thought the companies were "more likely to think outside of the box, more ethical, less prone to personality conflicts, less likely to attract negative political attention, and more likely to litigate lawsuits instead of settling."

Share price reaction is interesting, but I think it's the above reasoning that may show why businesses should have women at all levels of management. Some men have a reputation for making rash decisions, or trying to outdo a competitor just for the sake of winning even if it's not the best decision for the company.

The lead up to the GFC in the US shows how dangerous it can get when people/men are far too aggressive financially.

To add further fuel to this argument, according to Fidelity studies, women earn higher returns from investing than men and they save more. This is due to a variety of reasons such as being more likely to plan, more likely to think long-term, taking on less risk (for example, by going for more diversification) and being more patient & less trading.

Foolish takeaway

I certainly feel that there should be more women around the business and investment world. It should always be the best person for the job, regardless of gender.

There is a growing group of women CEOs on the ASX such as Jayne Hrdlicka at A2 Milk Company Ltd (ASX: A2M), Shemara Wikramanayake at Macquarie Group Ltd (ASX: MQG) and Elizabeth Gaines at Fortescue Metals Group Limited (ASX: FMG). It will be interesting to see how this group do over the coming years.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors started the week off in a good mood today.

Read more »

A cute young girl with curly hair sips a glass of milk through a straw with a smile on her face.
Broker Notes

Up 37% this year, why Macquarie expects A2 Milk shares to keep outperforming

Macquarie remains bullish on A2 Milk shares heading into 2026. Let’s see why.

Read more »

Woman and man calculating a dividend yield.
Share Market News

Big week for markets: Here's what to watch

Tech earnings, rate speculation, and Aussie inflation data could shake markets this week — but long-term investors should keep their…

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

dissapointed man at falling share price
Share Fallers

Why Boss Energy, Elsight, Pilbara Minerals, and Whitehaven Coal shares are falling today

These shares are starting the week in the red. But why?

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Broker Notes

Why Macquarie forecasts Northern Star shares are set to surge 55%

Macquarie believes Northern Star shares are well-placed to rocket higher.

Read more »

A group of people gathered around a laptop computer with various expressions of interest, concern and surprise on their faces. All are wearing glasses.
Share Market News

ASX 200 tech stock near record high, is it still a buy?

This company's soaring share price and rising profits are turning heads.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Bellevue Gold, Bubs, Clarity Pharmaceuticals, and Regal Partners shares are rising today

These shares are starting the week on a positive note.

Read more »