LONDON, Sept. 13, 2019 /PRNewswire/ -- 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 UKs 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 32% higher in all male boards when compared with 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%. So, it appears that mixed boards are more likely to avoid insolvency than either all male or all female run companies. The full report can be seen at this page https://www.companyrescue.co.uk/guides-knowledge/news/uk-smes-with-women-on-the-board-are-less-likely-to-go-insolvent-according-to-new-research-4373/.
As a recent study by Morgan Stanley found, firms which 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
Liquidations account for the vast majority of insolvencies. Administrations only accounted for 10% of insolvencies, which reflects the fact that administrations are more for larger businesses. Interestingly only 9 female-run companies used this tool, compared to 452 male-run companies. This is most likely due to 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 no large difference in the industry sectors between the different board types. All male boards are more common in the construction industry, which does have a higher overall insolvency rate, but it is not 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 but they also have a high insolvency rate.
Other analysis highlighted that 25% of all insolvencies occurred in the London area. However, interestingly a higher proportion of women run businesses that became insolvent were based in London.
Robert Moore, Marketing Manager for KSA Group, said; "This is the second year that we have researched the role of gender in the insolvency rates of SMEs. Last year we found that female dominated boards had a lower insolvency rate than male dominated boards. This year we looked at the role of gender diversity and found that mixed boards had lower insolvency rates than both all male and all female boards. Whilst it is not possible to prove that women are better at running businesses than men, the body of evidence is growing that companies which have women on the board do reap benefits in terms of increased profitability and less corporate failures."
Notes on the research
Using Companies House data KSA Group looked at companies that had become insolvent that have 2 or more directors in the year to June 2019. A total of 8003 companies. We looked at the total insolvencies of the different board types against the total trading companies of the same. 8003 companies fitting the criteria became insolvent out of a total of 1,580,923.
3962 out of 929,548 mixed boards became insolvent,
3761 out of 592,511 all male boards became insolvent and
280 out of 58,864 all women boards become insolvent.
Link to our research last year
KSA Group Ltd t/a Company Rescue
KSA Group are Turnaround Experts and Insolvency Practitioners.
Through our website www.companyrescue.co.uk we provide high quality, easy to understand advice on turnaround and insolvency problems. Supported by trained advisors who can explain what solutions are available to your problems.
The KSA group Ltd has offices in Berwick, Gateshead, Birmingham and the City of London.
Keith Steven is the managing director of KSA Group Ltd - a specialist firm of turnaround practitioners. Over 5,000 people have contacted KSA since Keith launched this unique website in 2000 and over 500 companies have now been directly assisted by the author over the last 18 years with assignments ranging from large multi-national projects to small recruitment firms.
Eric Walls - MIPA FABRP National Director of Turnaround and Insolvency
Eric Walls is a licensed insolvency practitioner regulated and licensed by the Insolvency Practitioners Association. His ethos is always "give the right advice, choose the right options, rescue first if possible." He has many years experience in accounting and insolvency having trained at Touche Ross (Deloitte) and has been involved in turnaround and insolvency since the early 90's. Eric gained his licence in 2002 and has been involved in many innovative turnarounds as well as hundreds of liquidations, administrations and bankruptcies across the whole of the UK.
Wayne Harrison - London Director of Insolvency
Wayne is also a licensed insolvency practitioner who is regulated and licensed by the IPA. He has over 15 year's insolvency experience and heads up our London office. He has extensive experience of corporate and personal insolvency, which culminated in him being appointed by the IPA to oversee the regulation of insolvency practitioners. He joined the IPA in 2003 where he was part of the team that developed and implemented its "Better Regulation Framework" and he managed its regulatory operations for three years before making the decision to return to insolvency practice with KSA Group in 2009.