Investing in gender equal companies - an attractive strategy?

Abstract: In this thesis we investigate whether gender equality enhances firm performance, if equal firms are less risky compared to unequal firms and if investors can profit from this. To evaluate performance and risk we create trading strategies and form portfolios of equal and unequal companies during the period March 2011 to August 2016. We test if the equal portfolio performs better and infers less risk compared to the unequal portfolio by running time series regressions on the returns of the portfolios and analyzing performance and risk. The results from our study show significant lower market betas in five out of six regressions for the equal portfolio compared to the unequal portfolio, indicating that the equal portfolio infers less risk. In terms of the performance, we are unable to draw certain conclusions regarding any excess return as a result of investments in equal companies but we can conclude that there is no significant difference in returns between the portfolios. Hence, our results imply that for investors who are not only concerned with profit but also with gender equality and socially responsible investing, the cost is not higher when investing in equal companies and the risk is lower.