Companies run by women are less likely to go bust
KSA Group Limited, has researched the UK SME market of over 4m businesses in an attempt to see if there was a gender bias on the board of companies that become insolvent.
The study was designed to investigate if the insolvency rate was higher for male or female-run companies. In the first study of its kind in the UK, companies were investigated to determine the gender of the board of companies that had either gone into administration or liquidation over the last twelve months, to see if there was any correlation between gender and the general financial health of a business.
- Insolvency rate is 70% higher in male-run companies
- 8 times as many companies are run by men than women
- There is little difference in the industry sectors of companies run by men or run by women
- Only 12 out of 347 companies that went into administrations were female run.
It was found that the insolvency rate of male-dominated businesses was 0.34% and those in female-dominated businesses was 0.20%. So, the insolvency rate is 70% higher in male-run businesses. Most interesting was the difference in companies that were likely to go into administration as opposed to liquidation. Administration is a more complex and costly insolvency mechanism and is more likely to be used on larger businesses which are disproportionally more male-dominated but, the fact being that out of 347 administrations in our data sets, only 12 were female-dominated.
What conclusions can we draw from these findings?
Robert Moore at KSA Group said; “It is apparent that the insolvency rate is higher in male-run businesses, but this may be due to a number of factors that have nothing to do with whether men are inherently worse at running businesses than women. It may well be that the businesses that tend to be more likely to become insolvent due to the nature of the industry or recent economic events are coincidently run by men.”
The study found that only real estate and letting businesses are overly represented in the data set of female-dominated businesses that have become insolvent. See the pie charts below which have categorised businesses into the established Standard Industry Classification.
So, are there any other reasons why we should not read too much into these figures and start saying that women are better at avoiding insolvency than men?
- The difference in size of each data set is substantial, with only 1 in 8 SME businesses being run by 75% or more women.
- We have only analysed one year’s worth of data,
- We have not taken into account all the types of businesses i.e. those with perhaps 2 women and one man on the board,
- Single director companies are not included,
- The data does not include businesses run by partnerships.
It is interesting to note however that this is a much higher ratio than even women on the boards of publicly listed companies. Only 7 FTSE 100 companies have women as CEO’s, although they do makeup about 19% of directors of FTSE 100 companies
The full findings and further details on the study can be found at
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