Correlation is not causation, but companies with more diverse boards also tend to have higher credit quality, according to new research from Moody’s Investors Service.
The rating agency reported that its research found that higher-rated companies have a higher share of women on their boards.
For instance, women account for 28% of the boards of investment-grade companies versus 24% for speculative-grade companies, Moody’s said.
“The data do not demonstrate direct causation between gender diversity and credit quality. But the presence of women on boards — and the potential diversity of opinion they bring — supports good corporate governance, which is positive for credit quality,” the report said.
Moody’s also found that the relationship between board diversity and credit quality is stronger in North America and Europe than in other regions.
Europe is leading the way with 32% of board seats occupied by women on average, up from 26% in 2022. And, in North America, the share is up to 28% from 26%, it said.
While the shares are lower elsewhere, in most regions, more highly-rated companies have a higher proportion of women on their boards, Moody’s noted.
By sector, consumer and service sector companies have a higher proportion of women on their boards, an average, whereas heavy industries tend to have lower female representation — reflecting the composition of their workforces.
“New government mandates, pressure from large institutional investors and stricter disclosure requirements will continue to increase gender diversity in the boardroom. But parity is still far away,” Moody’s said.