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Female-Led Firms: Performance and Risk Attitudes

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  • Parrotta, Pierpaolo

    ()
    (Maastricht University)

  • Smith, Nina

    ()
    (Aarhus University)

Abstract

This paper investigates the relationship between gender of the CEO and composition of the board of directors (female chairman and share of women in the boardroom) and firm's risk attitudes measured as variability in four firm outcome variables (investments, profits, return to equity, and sales). Using a merged employer-employee panel sample of Danish companies with more than 50 employees, we find extensive evidence of a negative association between female CEO and firm's risk attitudes. This finding might be consistent with the theoretical assumption according to which women typically present a substantially higher risk aversion profile and put more effort in monitoring firm activities than men in the financial matter domains. A number of robustness checks corroborate and better explain our main findings.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7613.

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Length: 26 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7613

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Keywords: firm performance; risk aversion; female CEO;

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References

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  1. Nina Smith & Valdemar Smith & Mette Verner, 2005. "Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms," CIE Discussion Papers, University of Copenhagen. Department of Economics. Centre for Industrial Economics 2005-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  2. Du Rietz, Anita & Henrekson, Magnus, 2000. " Testing the Female Underperformance Hypothesis," Small Business Economics, Springer, Springer, vol. 14(1), pages 1-10, February.
  3. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2009. "Individual risk attitudes: Measurement, determinants and behavioral consequences," Munich Reprints in Economics, University of Munich, Department of Economics 20049, University of Munich, Department of Economics.
  4. Nina Smith & Valdemar Smith & Mette Verner, 2013. "Why Are So Few Females Promoted into CEO and Vice President Positions? Danish Empirical Evidence, 1997?2007," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 66(2), pages 380-408, April.
  5. Eckel, Catherine C. & Grossman, Philip J., 2008. "Men, Women and Risk Aversion: Experimental Evidence," Handbook of Experimental Economics Results, Elsevier, Elsevier.
  6. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, Elsevier, vol. 94(2), pages 291-309, November.
  7. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Development Research Unit Working Paper Series, Monash University, Department of Economics archive-03, Monash University, Department of Economics.
  8. Hartog, Joop & Ferrer-i-Carbonell, Ada & Jonker, Nicole, 2002. "Linking Measured Risk Aversion to Individual Characteristics," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 55(1), pages 3-26.
  9. Bertrand, Marianne, 2011. "New Perspectives on Gender," Handbook of Labor Economics, Elsevier, Elsevier.
  10. Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Development Research Unit Working Paper Series, Monash University, Department of Economics archive-01, Monash University, Department of Economics.
  11. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 36(4), pages 620-30, October.
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