Gender diversity pays off: A new Stanford study finds equitable hiring boosts companies' stock prices

The study goes further, asking whether correlation can also be found in the financial sector. The researchers used a 2016 Financial Times article to find gender diversity data for Allstate, Bank of America, BlackRock, Citigroup, Franklin Templeton, Goldman Sachs, JPMorgan, Legg Mason, MetLife, and Morgan Stanley.

The primary variables for this second field study were gender diversity, stock performance for the day the article was published, and total US market performance for the days before and after the publish date.

Similar to the first study, the researchers found finance-sector companies with greater gender diversity saw their stock prices rise in tandem.

The researchers had one more question: What drove people to invest in companies when they announced better-than-expected gender diversity?

The team gave a sample of people with past experience in managerial roles $1 to bet on whether a company's share price would rise or fall after announcing better- or worse-than-expected gender diversity. After making their bets, the participants would then link their wager to several "belief items," such as morality, creativity, conflict of ideas, and risk aversion.

The experiment found that investors significantly increased their investment in companies with higher gender diversity than the industry average. These people were more likely to bet their $1 on the share price rising after such an announcement.

The researchers also found that people investing more in diverse companies felt the firms were more likely to think outside of the box, more ethical, more ethical, less prone to personality conflicts, less likely to attract negative political attention, and more likely to litigate lawsuits instead of settling.

These six driving factors "reliably moderated" the main effect of gender diversity on investors' bets, the team said.

Overall, the studies suggest investors' positive reactions to gender diversity isn't bound to a single industry, context, or belief. The researchers theorize the positive and significant correlation could extend to any industry where "organizations rely on problem-solving teams."

"Our work implies that organizations are systematically under-investing in gender diversity, challenging existing perspectives suggesting that investors are biased against gender diversity or that the net effects of gender diversity are likely to be null," the team concluded.

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