Finance Industry Today
New research suggests that UK SMEs with women on the board are less likely to go bust
Insolvency Practitioners, KSA Group Limited, has found that companies with mixed boards are less likely to become insolvent than those with all-male boards and all-female boards. The study looked at the insolvency rate of the UK's 1.5m companies, with 2 or more directors in the last 12 months to June 2019 taken from companies house.
Published 19 February 2020
Insolvency Practitioners, KSA Group Limited, who run the website www.companyrescue.co.uk, has found that companies with mixed boards are less likely to become insolvent than those with all-male boards and all-female boards. KSA looked at the insolvency rate of the UK's 1.5m companies, with 2 or more directors in the last 12 months to June 2019.
The insolvency rate is 49% higher in all-male boards than mixed boards
The insolvency rate is 32% higher in all-male boards when compared to all-female boards
The insolvency rate for male-dominated boards was 0.63%, for female boards it was 0.48% and for mixed boards, it was 0.43%. These rates suggest that mixed boards are more likely to avoid insolvency than either all male or all female-run companies.
These findings are supported by a recent study by Morgan Stanley. They found that firms who have a more gender equal board, have outperformed their less diverse peers by 2.8% per annum, in the last eight years. https://www.morganstanley.com/access/gender-diversity.
Looking at the actual companies that have fallen into insolvency, administrations only accounted for 10% of insolvencies. This reflects the fact that administrations are more suitable for larger businesses. Interestingly, only 9 female-run companies used this tool, compared to 452 male-run companies. It is most likely that this is due the fact that there are very few large all female-run companies.
A break down by industry sector of the companies shows there is not a large difference in the industry sectors between the different board types. It appears that all-male boards are more common in the construction industry, which does have a higher overall insolvency rate, yet it is not high enough to demonstrate that it is the male-dominated construction companies becoming insolvent that are responsible for the overall discrepancy. Mixed boards are more common in the administration and services sector, which also has a high insolvency rate.
Key Findings
The insolvency rate is 49% higher in all-male boards than mixed boards
The insolvency rate is 32% higher in all-male boards when compared to all-female boards
The insolvency rate for male-dominated boards was 0.63%, for female boards it was 0.48% and for mixed boards, it was 0.43%. These rates suggest that mixed boards are more likely to avoid insolvency than either all male or all female-run companies.
These findings are supported by a recent study by Morgan Stanley. They found that firms who have a more gender equal board, have outperformed their less diverse peers by 2.8% per annum, in the last eight years. https://www.morganstanley.com/access/gender-diversity.
Types of Insolvency
Looking at the actual companies that have fallen into insolvency, administrations only accounted for 10% of insolvencies. This reflects the fact that administrations are more suitable for larger businesses. Interestingly, only 9 female-run companies used this tool, compared to 452 male-run companies. It is most likely that this is due the fact that there are very few large all female-run companies.
Break down by Industry Sector
A break down by industry sector of the companies shows there is not a large difference in the industry sectors between the different board types. It appears that all-male boards are more common in the construction industry, which does have a higher overall insolvency rate, yet it is not high enough to demonstrate that it is the male-dominated construction companies becoming insolvent that are responsible for the overall discrepancy. Mixed boards are more common in the administration and services sector, which also has a high insolvency rate.
Share on Social Media
Other Industry News
Ready to start publishing
Sign Up today!
