According to Bloomberg Business, women account for nearly half of the workforce but yet only hold about 5 percent of CEO positions. And while it’s not exactly news that women are underrepresented in managerial and C-suite roles, a new study reveals just how serious the consequences may be for companies that aren’t promoting women at the same rate as their male peers.
A study by S&P Global Market Intelligence found that within the first 24 months of appointing female CFOs, companies averaged a 6 percent increase in profits and an 8 percent better stock return. Not only that, but women were bringing in $1.8 trillion in additional profits — well outpacing men. These jaw-dropping finds aren’t based on a limited or biased survey, either: researchers looked at 6,000 companies on the Russell 3000 list over a span of 17 years.
Why do female CFOs outperform their male peers so drastically? Daniel Sandberg, the senior director of quantitative research at S&P Global, thinks that it may be because women are held to a higher standard. Because the bar is placed higher for women, Sandberg says, “the result is that the male group that is a contender for an executive position is a little overfished, and the female contingent is underutilized.”
Considering that men outnumber women in the CFO role 6.5 to 1, this untapped talent pool may come as good news for companies looking for new ways to increase their bottom line.
For additional insights from the S&P report and to discover how gender parity affects the biggest companies, read more from Bloomberg Business here.