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According to SECP, companies having more female employees have better financial performance

While oftentimes corporates are hesitant to hire female employees, the Securities and Exchange Commission on Pakistan (SECP) has observed that companies having female employees are much better in financial performance.

SECP analyzed that there is a clear relation between gender diversity on boards and the financial performance of listed companies.

According to a recent report titled ‘Women on Board,’ the data from Pakistan shows a definitive positive impact of the SECP regulations on board gender diversity.

The most significant finding from the data collected from Pakistan was that there’s a direct relation between gender representation on boards and the financial performances of corporations. Listed companies were separated into those with and without women on their boards, and the average ROA (return on assets) and ROE (return on equity) of both the groups were calculated.

The results showed that the financial performance of companies with women was higher in 2017 and 2019. The SECP also looked at these returns on a sector basis. The percentage by which these values are higher varies from sector to sector.

These sectors include finance, engineering, automobile and textile. It’s clear that the only two sectors, i.e. healthcare and miscellaneous, where the number of women directors remained ‘constant’ or did not ‘increase’ showed the highest decrease in financial performance.

The SECP recommended that once effective measures are taken, an increase in women’s mandatory quota on boards is needed to make use of the benefits of gender diversity.

Effective measures included in diversity policies that are helpful for women include the provision of daycare centers, better maternity leaves, anti-harassment and speak-up policies with diverse committees handling such complaints. The presence of women on boards means that the authorities should also take into consideration these issues.

SECP added that adequate networking opportunities need to be given to senior women by nominating them on various industry forums. Evidence and statistics clearly suggest that having women on-board is beneficial for corporates, which is why, companies need to give equal opportunities to men and women, and give the latter a chance to showcase their talent and potential.

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