Do women CEOs deliver better returns?
An analysis of JSE-listed companies shows most are run by men. The boards that appoint the CEOs are made up of some of the smartest people available, so it implies that men must be more effective as CEOs than women. Right? Well, it raises a couple of interesting questions.Research shows that women make better bosses than men. There are numerous international studies that show that women exhibit higher levels of emotional intelligence in the workplace, have higher levels of empathy with their staff and are more collaborative than their male compatriots.That might make them better to work for - but does it provide shareholders with a higher return?A 12-year study by the Boston-based Quantopian compared the performance of Fortune 1000 companies led by women to the returns of the overall S&P 500.It found that companies with women CEOs delivered average equity returns of 226% over that time - a staggering three times the returns over the S&P, which is dominated by male bosses.Creators of exchange traded funds must be licking their lips in anticipation. An exchange traded fund can be constructed out of an index made up of anything from companies starting with the letter "A", if you wanted, to the sex of the CEO.The data suggest that an index of companies run by women may not be the world's worst idea.Trouble is, you couldn't do it in South Africa, where the management of listed companies is still largely the domain of men.Just a handful of women in corporate South Africa have risen to the top of big listed companies.US-born Cynthia Carroll had a tough time at the helm of Anglo American. Her six-year tenure at one of South Africa's oldest companies was fraught with difficulties. She forced a change in the way the company operated from a safety perspective and wrought wholesale change on the Oxbridge attitudes that dominated the downtown Johannesburg headquarters.But Anglo's corporate performance was disappointing: its share price fell 30% during her tenure, and the company took billions in write-offs on iron ore assets in Latin America. To be fair, rival Xstrata, run by a man, did worse. But Anglo saw profits out of diamonds, platinum and nickel implode.Global competitor Rio Tinto grew marginally, but BHP Billiton, under South African Marius Kloppers at the time, grew by more than 75%. Shareholders also never forgave Carroll for missing a dividend. Still, the fact that she'd inherited a company run by generations of men seemed inconsequential when it came time to go.Two of South Africa's more prominent corporations have female CEOs - and both are chaired by women too.Nonkululeko Nyembezi Heita, former CEO of ArcelorMittal South Africa, chairs JSE Limited, which is run by Nicky Newton-King, and former FNB CEO Wendy Lucas-Bull chairs Barclays Africa, which is run by Maria Ramos (below). Newton-King has been CEO of the JSE since January 2012. If you had invested R10000 in the company on the day she took over, your investment would now be worth R17647 - excluding dividends.JSE Limited has no competitors, so if you had invested the same amount of money in the Top 40 Index, it would be worth R15855. This is a decent outperformance by a company led by a woman over the male-dominated Top 40.However, Ramos's tenure at Barclays Africa has been considerably more turbulent and it's only in recent months that the share, along with the rest of the banking sector, has begun re-rating.Unlike Newton-King, Ramos was handed something of a hospital pass when she took over. The group was riven by a complex merger that brought Allied, Volkskas, Trust Bank and United under a single banner in the '90s - and it was not long after Barclays plc took control of the bank. The jury is still out on whether the repair job there is complete.Newton-King had the advantage of knowing exactly what she was getting herself into - she'd been on the JSE executive committee since 1997. Ramos was parachuted into Barclays Africa, then Absa, from Transnet in March 2009. She had the dubious advantage of taking over a bank in the throes of the worst financial crisis in living memory, when banks were global pariahs and valuations were under siege.For investors, R10000 put into Absa when Ramos took over would be worth R19049 today, excluding dividends.A decent return, perhaps, but R10000 invested into the banks index at the same time would now be worth R31119 and even the resource-heavy Top 40 has outperformed the bank. Your original investment in the Top 40 would be worth R25944.Companies run by women in South Africa, based on those figures, have given us very little other than anecdotal evidence to work from.Internationally, the position is clearer: the Credit Suisse Gender 3000 survey, which tracked 28000 executives in 3000 companies and 40 countries, showed that the return on equity for companies with women in more than 10% of key positions was 27% better than for those companies where women occupied less than 5% of the top posts.To add fuel to the fire, dividend payouts were more than 40% higher.So while the South African experiment remains tough to prove either way, globally, women-run businesses outperform.So why are most locally listed companies run by men? Turns out most directors of boards who choose the CEO are men, too.