Gender diversity is linked to business performance, according to NUS study

SINGAPORE — Advocates for corporate gender equality might want to take a closer look at research from the National University of Singapore (NUS), which links diversity to business performance.

Having just one female independent director on a company's board can raise its business performance by at least one measure, according to a study by NUS.

The study, led by Associate Professor Lawrence Loh from NUS Business School, found that if the average number of female independent directors on boards increases by one, the company's performance, as measured by Tobin's Q ratio of market value to book value, would rise by 11.8 per cent.

Useful for the valuation of a company, the Q Ratio links the market value of a firm to the replacement cost of its assets.

Mr Loh used econometric techniques to analyse data from 500 companies listed in Singapore in the past five years.

His research also found that board gender diversity has a "positive and statistically significant" impact on corporate governance, which in turn has a similar effect on financial performance.

Women comprised 10.8 per cent of directors on Singapore-listed companies last year, according to data from the Diversity Action Committee, a body set up by the government to address female under-representation on company boards.

Singapore Exchange chief executive Loh Boon Chye, who also chairs the committee, said the study was timely given proposed revisions to Singapore's Code of Corporate Governance aimed at promoting diversity.

"We hope that companies will now appreciate the benefits and take action to bring more women onto their boards," Mr Loh said. BLOOMBERG