Women on the Board Not Only Aid Bottom Line but Thwart Bankruptcy - Building Gender Balanced Business

• Having women on a company’s board of directors increases profit, most every study shows, even if some disagree on the degree.

• But in this season of economic collapse, it helps to know that having women on the board also reduces the risk of a company’s going bust.

• A study by Leeds University Business School summarised by The Times of London shows that having at least one female director cuts a company’s chances of ending up belly up by about 20%.

• Having two or three female directors further reduced the risk of bankruptcy, but the advantage eased once the board reached gender parity.

• Nick Wilson, professor of credit management at LUBS, based his findings on all 17,000 UK companies that went insolvent in 2008.

• Even adjusting for family-run business, which he thought might have skewed the results, did not eliminate the clear advantage for companies with female directors.

• Wilson adds to the drumbeat of those who note, as this site has summarised, that the overwhelmingly male makeup of the financial sector surely had some role to play in its setting off the current financial crisis. Only 1 in 5 financial company directors is a woman.

• “That sector, which includes banking, is a bit of a boys’ network. It has one of the lowest proportions of female directors,” Wilson says. “Having more women could well have made a difference.”

• Wilson cites diversity of opinion as one advantage women probably bring to a board; the other main theories are that they resist high debt while being better at cash-flow management, and that they are better on average at people management.

• “It has been suggested that because women generally have to work harder to make it to the boardroom, the ones that do make it are exceptionally effective,” he adds.

• An analysis by Delta Economics also has suggested that businesses with men at the helm are more likely to go bust than those captained by women.

The Times report on the Leeds study