Women on boards boosts share price

The best performing companies are likely to have a small board and a high proportion of female directors, according to new research by law firm Eversheds.

It studied the share price performance of 241 companies around the globe between January 2007 and December 2009.

The data was then used to find the “ideal” board composition.

The results showed a high female presence was the third strongest link to good share price performance, after board size and substantial shareholders (where the majority of investors hold more than 3% of the issued capital each).

It follows a recent report by Lord Davies, who warned UK boardrooms were “in crisis” over the low percentage of females on boards.

He called for the introduction of a quota if companies do not voluntarily double female representation in the next four years.

11 board members was revealed as the optimum number for a FTSE 100 company. The boards surveyed had between six and 32 directors.

The study also found a strong correlation between share price performance and the number of independent directors on company boards.

Mark Spinner, corporate partner at Eversheds, said: “During the financial crisis, many directors reported that there was a ‘power shift’, with executive directors relying on the experience of non-executive directors more than previously.

"However, the general consensus seems to be that this would not be a permanent change – many directors believe now is the time for non-executive directors to ‘pull back’ and allow the executive management team to manage.”