More Women Representation In Boards Of Higher Rated Firms, European Cos Lead In Gender Diversity: Moody’s

Moody's in its analysis noted that women make up an average of 29 per cent of the board seats of investment-grade firms, which are rated Baa and above, higher by a percentage than in 2023

In terms of sector, service-inclined companies showed the most diversity in their boards

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Higher-rated firms have more percentage of women on their boards than lower-rated companies, Moody’s Investors Service said on Tuesday. The global ratings agency in its analysis noted that women make up an average of 29 per cent of the board seats of investment-grade firms, which are rated Baa and above, higher by a percentage than in 2023. 

The analysis found that on average, women accounted for 24 per cent of the board seats of speculative-grade firms, those rated Ba and below. The figure for these firms remained unchanged from a year earlier, reported PTI.

The study found that firms based in advanced economies displayed a correlation between gender diversity on the boards and credit ratings, however, the firms in emerging markets didn’t. The study, based on 3,138 Moody’s rated firms, comprised of 24 firms rated Aaa, 146 companies with a rating of Aa, 728 with A ratings, 1,165 firms with Baa rating, 582 with Ba, 394 firms rated B, 90 firms rated Caa, and 9 companies rated Ca. 

Region-wise, about 35 per cent women occupied board seats in European firms in the study sample, higher than 33 per cent reported a year earlier. Following this, the North American companies included 30 per cent female representation on their boards, higher from 29 per cent clocked in 2023. In Latin America, the Middle East, Africa, and Asia-Pacific, women made up less than 20 per cent of the board members. 

Elaborating on the report, Moody’s noted, “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 data do not demonstrate direct causation between gender diversity and credit quality.”

In terms of sector, service-inclined companies showed the most diversity in their boards. About one-third of the board members in service and consumer sectors, like insurance, retail, business products, healthcare, pharmaceuticals, utilities, and consumer products, were women. The agency noted this represented the corporate board in Europe and North America, where the majority of the firms included in the study were located.