When women are in boardrooms, companies attract not only more diverse viewpoints but also more profits. As it turns out, female chief financial officers are pretty good at bringing in profits, too — to the tune of US$1.8 trillion more than the industry average during their male predecessors’ tenures.

Female chief executive officers are more successful, too: A 17-year study by S&P Global Market Intelligence found that when women took over leadership of public companies from male predecessors, the women oversaw an average 20% increase in stock performance in the first 24 months of their appointment. Investors also perceived those companies with women CEOs as less risky.

Researchers assessed new CEO and CFO appointments on the Russell 3000 Index — a benchmark of the entire U.S. stock market – in the period between 2002 and 2019. During this time, there were 5,825 new CEO and CFO appointments, of which, 578 were of women taking over for male predecessors.

In the first two years of being appointed, companies with female CFOs saw a 6% increase in profits and an 8% increase in stock return compared to the sector’s average performance when men had held the positions in the same companies. In total, companies with women CFOs, during their tenures, generated a combined $1.8 trillion more in gross profits than their sectors’ prior averages. For instance, one of the firms with a female CFO made US$208.6 million as gross profits in a quarter – US$33 million more than the sector’s $175.7 million average gross profit in the same quarter during their male predecessors’ tenure.

Per the S&P report, women leaders also made companies more gender diverse. In the study period, researchers found that when companies hired women CEOs or CFOs, their companies’ boards had twice the number of female board members than the market average.

On analyzing why these companies were more profitable and/or were perceived as less risky by investors, Daniel Sandberg, PhD, senior director of quantitative research at S&P Global and the author of the report, said in a press release, “The bar is a little bit higher for females.”

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“The high male-to-female ratio of executives in C-suite positions supports this premise. Being more selective with female appointees means that the board of directors may pass over a more qualified female in favor of a less qualified male,” Sandberg wrote in the analysis. “If this is the case, it follows that the remaining pool of female contenders for C-suite positions remains richer with talent.”

“Or, put another way,” reported CNN, “boards hire men much more frequently, even though some of the men they appoint aren’t necessarily as qualified as some women candidates, as suggested by the outperformance of the women executives in the S&P study.”

Therefore, “The result is that the male group that is a contender for an executive position is a little over-fished, and the female contingent is under-utilized,” said Sandberg in the press release.

Male CFOs outnumbered women in the CFO job by about 6.5 to 1, and male CEOs outnumbered women at the top by 19 to 1.

This unequal ratio is true of other leadership positions as well. Although women outperform men in leadership skills such as taking initiative, resilience, practicing self-development, driving for results – “…the disturbing fact is that the percentage of women in senior leadership roles in businesses has remained relatively steady. Only 4.9% of Fortune 500 CEOs and 2% of S&P 500 CEOs are women. And those numbers are declining globally,” The Swaddle has previously reported.

In India too, the scene is not any better. Indian women hold just 12.4% of board seats and a meager 3.2% of board chairs as of 2017, per a Deloitte survey titled “Women in the Boardroom: A Global Perspective – Fifth Edition.”

When time and again, studies have proven that companies with women at the helm in various capacities perform better, through good times and crises, it only becomes, “… imperative for employers to change the way they hire and promote in senior positions by constantly asking themselves if they are functioning on autopilot and selecting the man over an equally eligible female candidate.”