A higher share of women on supervisory boards has a positive impact on the profitability of larger firms. Companies that appoint more women to their oversight bodies exhibit a better risk profile and promote sustainable corporate growth. These are the findings of a study by the Austrian National Bank (OeNB), which—according to its authors—demonstrates for the first time a deeper causal link between a higher female ratio on supervisory boards and company success.

“Our study empirically and causally shows that a higher share of women on the supervisory boards of large companies is not only ethically or socially, but above all economically sensible,” write the authors in a blog post on the National Bank’s website. They show, for example, that each ten-percentage-point increase in women on the board leads to roughly one extra percentage point in return on equity. Statistically significant and positive effects also emerged for return on assets.

Impact on Leverage and Sustainable Growth

The authors further find that a higher female board ratio reduces companies’ leverage ratios, thereby contributing to corporate stability. The sustainable growth rate of the firms in the sample also strengthened with more women on the board. “This result is particularly relevant because little empirical evidence has so far existed on the link between the female board ratio (FBR) and companies’ sustainable growth,” the authors explain. The study is based on a broad dataset covering the largest publicly listed U.S. firms (S&P 500) over a 20-year period.

Women as Strategic Enrichment

The paper attributes these results to women bringing “valuable strategic enrichment to the board by contributing unique skills, specialized expertise and diverse perspectives.” These qualities are said to strengthen corporate governance, improve board oversight competence and enhance advisory efficiency. Other benefits include fresh impulses on strategy and risk issues and better team dynamics.

Macroeconomic Benefits

On the macroeconomic level, the study finds that a higher share of women on supervisory boards “increases real GDP per capita, nominal GDP growth, gross investment and reduces the unemployment rate.” “Companies and economies should therefore actively work towards stronger inclusion of women in top management,” the authors conclude.