An index that tracks Vietnamese companies with women CEOs has nearly tripled over the past five years, easily beating the benchmark index, according to data from Bloomberg and Intelligent Financial Research & Consulting.
The 43 companies with women at the helm have gained 40 percent this year and 193 percent since 2009, nearly twice as much as the 107 percent gain for the VN index benchmark. The women-led stocks are spread across seven industries, and their returns over the past five years were 72 percent at the median, compared to a 55 percent median for the VN index.
Among the country’s companies, women hold 6.27 percent of board seats, a low figure but still the second-highest among Southeast Asian countries, behind the Philippines. The country may be more friendly to female business leaders as women took over businesses and finances during the war in the 1970s and have passed down those experiences, Bloomberg explains. “Women became very independent,” Le Thi Thu Thuy, former CEO of Vingroup, told the publication.
The outperformance of female-led companies in the country fits in with a deep body of research that shows women in leadership produce better results. A 2012 Credit Suisse study found that companies with at least one woman on their boards outperformed all-male ones by 26 percent over six years. Another similarly found that companies with women on the boards saw their stock prices outperform the benchmarks. Yet another focused on Israeli companies found that companies with at least three women attending board meetings had significantly better returns that those with just men showing up. And hedge funds run by women had a 6 percent return while a global index actually saw a loss.
This may be because women make decisions that are more aligned with long-term growth. A survey of 600 board directors found that women’s decisions lead to better company performance. Having more women on a given company’s board correlates with it paying less for buying other companies and reducing the number of acquisitions it makes overall, both of which protect shareholder value and firm performance. But it is also about simply bringing a more diverse set of ideas to the table, which can optimize decision-making.
The United States does better when it comes to diversity than Southeast Asian countries: Women hold 16.9 percent of board seats at Fortune 500 companies and make up 14.6 percent of those companies’ executive officers. But progress has stalled, with no significant year-over-year increase in board seats in eight years and no increase in executive officers for four.
And other countries are doing better. Women hold 35 percent of non-executive board positions in Norway. In the United Kingdom, the number of women on boards recently hit a record high. That progress comes after the countries instituted aggressive diversity policies. Norway was the first country to institute a 40 percent quota for women on boards, with a handful of other countries following and the European Union as a whole poised to do the same. The U.K. set a target of 25 percent female representation by the end of 2015. The U.S., on the other hand, only has rules from the Securities and Exchange Commission that require companies to disclose information about how they consider diversity when choosing board members, which are so vague that they don’t necessarily mean gender or racial diversity and aren’t intended to change companies’ behavior. Yet 60 percent of large companies fail to comply with even this small nudge.