Home Business News Companies run by women are less likely to go insolvent than those run by men

Companies run by women are less likely to go insolvent than those run by men

by LLB Finance Reporter
11th Mar 24 9:01 am

New research from Creditsafe shows that male-owned businesses were more likely to go into insolvency between January-December 2023 than those run by females.

The study compared the insolvency rates of companies with female directors on the board against those with exclusively male directors. Results revealed that male-dominated companies experienced a 5.10% insolvency rate, whereas companies with female directors faced a lower rate of 3.67%.

This means that companies were 39% more likely to become insolvent if their boards were male-dominated.

The study also looked at how many companies have a female director in the UK, with a 7% increase in the number of companies with at least one female director in 2023 compared to 2019. This signifies that either a woman led the business individually or was part of a management team which included a female director.

While the number of female directors had been steadily rising over the years, peaking in 2022, there was a slight decline in 2023. This decline could be attributed to various factors, including economic conditions, shifts in government policies, or social influences, mirroring a similar trend observed in the number of business insolvencies during the same period.

Comparatively, there was a 3% uptick in the number of companies with only male directors compared to 2019.

Despite these fluctuations, the enduring gap between the counts of female and male directors underscores the persistent challenges in attaining gender equality within business leadership roles.

Drew Fahiya, Creditsafe’s data director, points out that men might simply gravitate towards more risky business sectors: “The study shows that there is a higher rate of insolvency in male-run businesses, but this could stem from various factors unrelated to their effectiveness compared to women. It may well be that the types of businesses that men tend to run are more vulnerable to insolvency”.

In 2023, a total of 30,199 UK businesses were involved in some form of insolvency action, marking a 52% increase compared to 2021.

Drew added: “Though it’s not possible to prove that women are better at running businesses over men, there’s mounting evidence suggesting that companies with female board members experience advantages such as heightened profitability and reduced failure rates.

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]