Gender And Decision-Making In The C-Suite

This study empirically tests the implications of five theories on the importance of gender in the C-suite. Specifically, I examine the impact of the Chief Financial Officer (CFO) gender on the stock price response at the appointment of the executive and on post-hiring firm performance. The results from both tests are in support of the notion that female executives are less overconfident, but not less risk-averse, than their male counterparts. Particularly, I find that investors respond relatively less favorably to the appointment of female CFOs compared to that of male CFOs at firms characterized by high uncertainty. Further, the evidence also shows that female CFOs significantly improve performance, represented by cash flow and returns, at firms operating in low volatility settings. The enhanced firm performance can be attributed to reduction in costs and enhanced efficiency of working capital management. Finally, I document that female CFOs are more likely to reduce the excess cash reserves than their male counterparts and mitigate the agency costs of cash holdings, which are also best explained by the overconfidence hypothesis. The findings are robust to a battery of robustness checks