Companies Led by Women Deemed Less Risky, Fare Better in Crisis

Numerous studies have shown that female-led companies outperform male-led companies on metrics ranging from stock price momentum and returns, profitability increases and employee satisfaction. Venture capitalism-backed firms with female founders or predominantly female leadership groups have been found to sell or go public faster, and at higher valuations. Despite this, VC funding for female entrepreneurs fell as a percentage of overall investment during the pandemic, while total VC investment grew. New analysis from Credit Benchmark suggests that female-led companies are also a better credit risk, particularly in times of economic turmoil.

Women continue to be perceived as less suitable for leadership roles than men, with a survey showing that only 69% of US-based respondents reported feeling ‘very comfortable’ having a woman as the CEO of a major US company. This percentage fell to as low as 39% across other G7 nations, and there has been little to no growth in the positive perception of female leadership since the survey began in 2018.

Consensus credit risk data, based on the collated views of expert analysts from leading global financial institutions, supports the evidence that female-led firms perform better – and are considered less of a credit risk. Analysis on the data also shows that companies with a woman in charge weathered the storm of the pandemic with greater success and demonstrated a smaller increase in the probability of defaulting than those run by men.

6% of CEO positions at S&P500 companies are currently held by women. Credit Benchmark provides a Credit Consensus Rating (CCR) for 87% of these female-led companies [please continue below to access full report].

Figure 1: COVID-19 impact on Female / Male CEO S&P500 companies

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    Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.