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Cash is Queen: Female CEOs’ propensity to hoard cash

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  • Sah, Nilesh B.

Abstract

Recent research makes contradictory claims regarding why female CEOs eschew riskier policies. Benchmarking risk aversion by how much cash is accumulated and managed, we find strong evidence of greater female risk aversion above the glass ceiling. Using propensity-score matching and difference-in-differences around CEO transitions to account for possible endogeneity, we find that female CEOs hold more cash, reverse cash deficits faster, and are more likely to use excess cash to increase dividends, but not investment. We also find that, in the presence of high cash holdings, female CEOs are able to generate significantly higher Return on Assets (ROA) suggesting that risk aversion on the part of female CEOs does not hurt financial performance but rather enhances it.

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  • Sah, Nilesh B., 2021. "Cash is Queen: Female CEOs’ propensity to hoard cash," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    • Handle: RePEc:eee:beexfi:v:29:y:2021:i:c:s2214635020303397
    DOI: 10.1016/j.jbef.2020.100412
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    1. Sah, Nilesh B. & More, Deepak G., 2022. "Dual class firms and trade credit," Finance Research Letters, Elsevier, vol. 46(PA).

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    More about this item

    Keywords

    Cash holdings; Speed of adjustment; Excess cash; CEO gender; Risk aversion; Financial performance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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