Do women-run companies turn a profit more than male-run companies? As new data shows us from the UK, the answer is yes!
The UK’s largest insolvency website, Company Rescue, has published research into whether there is a gender bias on the board of companies that become insolvent. They 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.
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.
Key findings
- Insolvency rate is 71% higher in male-run companies
- 9 times as many companies are run by men than women
- There is a small difference in the industry sectors of companies run by men or run by women. Construction businesses are more likely to be run by men and education businesses are more likely to be run by women.
- It was found that the insolvency rate of male-dominated businesses was 0.7% and those in female-dominated businesses was 0.41%. So, the insolvency rate is 71% higher in male-run businesses.
What conclusions can be drawn from these findings?
Keith Steven, MD of Company Rescue said in a press release; “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.”
However, he went on to add: “This is now the third study that we have carried out since 2018 and the results are very similar. In 2018 the types of businesses run by women were different to the ones in 2024. In 2018 property businesses made up a higher proportion of women run businesses that went into insolvency whereas in 2024 it was Retail and Education.
This might suggest that the business sector is not that relevant and so pointing to a higher financial competency, or less risk taking, by women directors.”
Women in the insolvency profession
On average, 15% of Licensed Insolvency Practitioners (IPs) are women – which does mirror the number of women run businesses. They reached this number by analyzing a large sample of the register of insolvency practitioners listed on the GOV.UK website.
Women-run companies in the United States
The question of whether male or females are better at running businesses has been researched in the United States. The researchers found that there was no discernible difference. However, research done after the financial crisis did show that female-run banks were less likely to go bust. You can find additional data around the fact that companies led by women do in fact have larger revenues overall, which should be a great reason to champion women business owners while also dismantling negative gender stereotypes that still prevail around women in the corporate sector.
Can Gender Impact Business Outcomes?
Clearly more studies could be done in this area to see if there really are any gender influences in business failures. Given that many business failures are caused by not acting early enough and not taking advice, then the old cliché that men don’t follow instructions or ask for help in many aspects of their lives may just be true in their roles as Directors of companies.
You can read more of the data out of the UK by heading to the Company Rescue website.
