Firms lead by women are more profitable

This report, witten by Annu Kotiranta, Anne Kovalainen, Petri Rouvinen has been published by the Finnish Business and Policy Forum. This should inspire our shareholders when they chose a CEO…


 

the summary of the report states that less than a tenth of the CEOs of Finnish firms and less than a fourth of the corporate board members are women. From a social standpoint more women are desired in top management, but should firms’ owners  be concerned with women’s role in top management? Since hard facts have been in short supply, study seeks to an answer the question by applying scientific research methods.

Surprisingly results indicate that a company led by a female CEO is on average slightly more than a percentage point – in practice about ten per cent – more profitable than a corresponding company led by a male CEO. This observation holds even after taking into account size differences and a number other factors possibly affecting profit ability. The share of female board members also has a similar positive impact.

If and when Finland seeks to increase the share of women in top management, these endeavours should not be hindered because of concerns about private firms’ profitability – quite the contrary, in fact.