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Girls Will Be Girls? The Gendered Effect of Economic Policy Uncertainty on Corporate Investment

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  • Caroline PERRIN

    (LaRGE Research Center, Université de Strasbourg)

  • Laurent WEILL

    (LaRGE Research Center, Université de Strasbourg)

Abstract

We examine the effect of CEO gender on the relation between economic policy uncertainty (EPU) and corporate investment. Using the newspaper-based EPU index developed by Baker, Bloom, and Davis (2016), we perform an empirical investigation on firm-level data of more than 38,000 firms from eight European countries for 2010-2019. We find evidence that higher EPU is associated with higher corporate investment. However, we show that this beneficial effect of economic policy uncertainty is lower when the firm CEO is a woman. We explain this finding by the higher risk aversion of women relative to men. Our main results are robust to a battery of sensitivity tests. Our work contributes to the debate on the impact of EPU on firm corporate decisions by bringing upfront the influence of CEO gender.

Suggested Citation

  • Caroline PERRIN & Laurent WEILL, 2021. "Girls Will Be Girls? The Gendered Effect of Economic Policy Uncertainty on Corporate Investment," Working Papers of LaRGE Research Center 2021-04, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    • Handle: RePEc:lar:wpaper:2021-04
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    More about this item

    Keywords

    Economic policy uncertainty; firm investment; CEO gender.;
    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
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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