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Are female top executives more risk-averse or more ethical? Evidence from corporate cash holdings policy

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  • Doan, Trang
  • Iskandar-Datta, Mai

Abstract

This study examines the impact of gender in the C-Suite on corporate decision making. In particular, we investigate the influence of the Chief Financial Officer (CFO)’s gender on the agency costs of free cash flow. We document that female CFOs reduce cash holdings in firms with excess cash, which should alleviate the agency conflict arising from managerial discretion. We also find that female CFOs at firms with surplus cash increase distributions to shareholders in the form of dividends. The empirical evidence also shows that the reduction in cash does not lead to suboptimal investment policies. Of the two competing hypotheses – gender-ethics hypothesis and risk-aversion hypothesis—these results are consistent with the view that female CFOs undertake more ethical but not more risk-averse decisions than their male counterparts. Our results are robust to a battery of robustness tests.

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  • Doan, Trang & Iskandar-Datta, Mai, 2020. "Are female top executives more risk-averse or more ethical? Evidence from corporate cash holdings policy," Journal of Empirical Finance, Elsevier, vol. 55(C), pages 161-176.
    • Handle: RePEc:eee:empfin:v:55:y:2020:i:c:p:161-176
    DOI: 10.1016/j.jempfin.2019.11.005
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    Cited by:

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    6. Robert Huterski & Grazyna Voss & Agnieszka Huterska, 2020. "Professional Ethics in Accounting as Assessed by Managers of Economic Units," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 720-731.
    7. Nguyen, Thanh Thi Phuong & Thai, Hanh Minh, 2022. "Effects of female directors on gender diversity at lower organization levels and CSR performance: Evidence in Japan," Global Finance Journal, Elsevier, vol. 53(C).
    8. Ruiying Xiao, 2024. "Female Entrepreneur on Board:Assessing the Effect of Gender on Corporate Financial Constraints," Papers 2401.02134, arXiv.org.
    9. Fai Lim Loi & Jean Jinghan Chen & Zhuo Qiao, 2023. "CEO cultural background and corporate cash holdings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 1069-1100, April.
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    More about this item

    Keywords

    Cash policy; CFO gender; Agency costs; Risk-aversion; Business ethics;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G40 - Financial Economics - - Behavioral Finance - - - General

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