A global diversity study by Credit Suisse Research Institute has concluded that inclusion of women on a board of directors and in the ranks of senior management significantly increases a company’s likelihood of achieving higher returns on equity, higher price-to-book valuations and superior stock market performance.

However, the figure for women represented on boards in the global energy industry was just 9.4% at the end of 2013, the lowest of the report’s 10 industry divisions and well below the worldwide average of 12.7%. While industry representation was significantly above the 6.7% reported in 2010, 43.5% of energy sector boards globally had no women members at all, compared to 33.7% across all sectors.

In the U.S., female representation on boards has increased from 12.7% in 2010 to 13.7% in 2013. Quota and target initiatives in Europe have resulted in about 52% of European companies reporting more than 20% representation by women on their boards, more than doubling North America’s 24.6%.

The study identified 28,000 senior managers at 3,000 companies worldwide that are covered by Credit Suisse analysts.

“Adjusting for any industry bias, companies with more than 15% of women in top management carry a 2013 [return on equity] of 14.7%, compared to 9.7% for those where women represent less than 10% of the top management,” stated “The CS Gender 3000: Women in Senior Management” report, released in September. “Looking across the roles within management, we found that companies where female CEO and operations man­agement account for more than 10% of these roles exhibit [a return on equity of] 15.2% vs. 11.9% where their pres­ence is less than 5%.”

In corresponding market capitalization, energy ran counter to the trend in all other sectors. The other nine showed progressive increases in market cap as more women were added to boards. Energy, however, peaked at $44.3 billion when two women were seated on the board. When three or more women were on a board, the average market cap was $31.3 billion.

In the global oil and gas industry, women constituted 1.5% of CEOs, 7.0% of business unit heads, 12.6% of those in CFO and strategy roles (including investor relations), 18.8% of shared services roles (including human resources, legal, information technology and external relations); and 11.0% of all senior management positions.

Credit Suisse analysts expressed concern over what they termed the “Management Power Line.”

“While the representation of women in management positions and on the board of companies is similar, it is qualitatively dif­ferent in its make-up,” the report stated. “The importance of these roles in terms of career progression, compensation and ability to move laterally admittedly varies a lot from sector to sector and from company to company, but we would contend that these tend to reflect less influential positions in the management’s structure.

“Based on Bloomberg data, about 94% of S&P 500 CEOs held top operations posi­tions immediately before ascending to the top job. The relative scarcity of women overseeing product lines or entire business units risks slowing their advance to the very top. Even when looking at management structures—aside from boards—women appear to have more supervi­sion than direct influence.”

Among the report’s key findings globally:

  • Board diversity is up in almost every country and every sector, from 9.6% in 2010 to 12.7% at the end of 2013. The share of women in top-management (CEO and direc­tors reporting to the CEO) stood at 12.9% at the end of 2013;
  • Regional differences in diversity are more striking than those at a sector level;
  • A positive correlation exists between a company’s market capitalization and its level of gender diversity at both the board level and in top management;
  • Women in top management tend to be in roles skewed toward areas of less influ­ence and with lower promotion opportunities;
  • Companies with greater board gender diver­sity boast excess stock market returns adjusted for sector bias—those with more than one woman on the board have returned a compound 3.7% a year over those that have none since 2005;
  • Using a widely used risk metric—the debt to equity ratio—Credit Suisse found almost no difference between companies with no women on the board and those with at least one woman on the board in terms of appetite for debt; this runs counter to the suggestion that women operate an inherently risk averse approach;
  • Female CEOs in Europe and the U.S. tend be less inclined than men in acquiring other companies;
  • Three main obstacles remain in the achievement of greater gender diversity: cultural biases; workplace-related biases; and structural/policy issues;
  • Quotas designed to drive higher gender diversity have not had significant impact yet beyond the boards.

Perhaps the most striking finding from the study was the scrutiny of the bottom line in companies with more top management positions held by women vs. those with less.

“Although the sample size for female CEOs compared to that of male CEOs is not statistically significant, it is interesting to note that [rates of return on equity] and [price-to-book valuations] are greater where there is a female CEO,” said Credit Suisse. “Either female CEOs make companies better or better companies hire female CEOs; or both.”