Home / Business / Gender Diversity Pays Off: A new study by Stanford shows that just attitudes boost corporate stock prices

Gender Diversity Pays Off: A new study by Stanford shows that just attitudes boost corporate stock prices



Associated Press / Wilfredo Lee

  • Companies that report better-than-expected gender diversity are performing better, according to a new Stanford Graduate School of Business study.
  • Raising Stock Prices Follow the announcements on gender diversity in the technology and financial sectors, two areas that are known for high levels of gender disparity in staffing benefits.
  • For more information, visit the Markets Insider homepage.

According to a new Stanford Graduate School of Business study

the researchers published in Stanford, Northwestern, Dartmouth, USA, share prices rise when companies indicate a higher level of gender diversity than investors expect and Hong Kong University for Science and technology used two field studies and one laboratory experiment to test the correlation between business valuation and gender diversity.

In her paper, it was found that previous studies on the two variables did not indicate any association. It was "unknown how, why, and when investors are responding to gender diversity."

The report was written by Professors David Daniels, Jennifer Dannals, Thomas Lys, and Margaret Neale.

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Gender diversity in technology

Reuters

The study opens with a Google Diversity Announcement from 2014, in which 70% of employees were men. Google's stock fell 0.39% on the day of the announcement.

The researchers predicted that if Google had announced a workforce with an additional one percentage point more female representation, Google would have increased its market value by about $ 375 million.

] The researchers used Google as a benchmark for studying other technology companies and measured the stock performance of other companies on the days they posted their hiring data.

Since then, the Alphabet-owned technology group has been a leader in its field, setting a "industry recipe" for other Silicon Valley companies. Total US market returns were used as a variable to add context to stock moves.

The researchers found a significant positive correlation between the stock price and a higher diversity level than Google. The team weighed stock jumps against market-wide moves, but noted that investors piled up as technology companies announced better than expected gender diversity.


Does the financial sector follow?

Andrew Burton / Getty Images

] The study goes on to ask if correlation can be found in the financial sector as well. The researchers used a Financial Times article from 2016 to identify gender diversity data for Allstate, Bank of America, BlackRock, Citigroup, Franklin Templeton, Goldman Sachs, JPMorgan, Legg Mason, MetLife, and Morgan Stanley.

The primary variables for this second field study were gender diversity, stock performance for the day the item was published, and overall US market performance for the days before and after the release date. In the case of diversity, stock prices rose at the same time.


What beliefs drive investment in gender diversity?

Reuters / Aly Song

The researchers asked another question: what motivated people to invest in companies when they announced better than -expected gender diversity?

The team cited a sample of $ 1 USD senior executives to bet on whether a company's stock price would rise or fall after a year better or worse than expected gender diversity. Once the participants had made their bets, they linked their missions with several "beliefs" such as morality, creativity, conflicting ideas, and risk aversion.

The experiment found that investors significantly increased their investment in higher-gender companies than the industry average. These people are more likely to bet $ 1 on the rising stock price after such an announcement.

The researchers also found that people who invested more in different companies felt that companies were more likely to think outside the box, ethically and ethically ethically, less prone to personality conflicts, less for negative political attention and more for Litigation as for the settlement of disputes.

These six driving factors have "reliably mitigated" the main effect of gender diversity on investor bets, the team

Overall, the studies suggest that investors' positive responses to gender diversity are not to a single industry , a particular context or belief. Researchers believe the positive and significant correlation could extend to any industry where "businesses rely on problem-solving teams."

"Our work implies that companies systematically invest too little in gender diversity and challenge existing perspectives, suggesting that investors are biased against gender diversity or that the net effects of gender diversity are likely to be zero," concluded the team.

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