Author:
Hurley Dene,Choudhary Amod
Abstract
Purpose
The purpose of this study is to examine the role of chief financial officers’ (CFOs’) gender in financial risk taking of 58 US companies along with the impact of having women board members.
Design/methodology/approach
Using a panel data of 58 selected S&P 500 companies during the period 2012-2016, this paper determines whether the gender of CFOs and having women board members play a role in risk-taking behavior of firms.
Findings
Firms led by female CFOs are smaller in size with lower net income and net revenue. The panel data analysis shows that the impact of female CFOs on firms’ financial risk is mixed, depending on risk measures used, whereas increasing female board members reduces that risk.
Research limitations/implications
The data used is limited to 58 S&P 500 companies, and two of the three risk-taking measures used in the study, specifically investment in property, plant and equipment (PPE) and debt/equity ratio, may not be applicable to some industries.
Practical implications
The findings provide mixed evidence of risk aversion by females in executive and leadership positions, depending on the measures used and the management responsibilities they undertake (CFO versus board member) with support for the glass cliff phenomenon in which females may be leading financially precarious organizations.
Social implications
Female CFOs are found to be leading relatively smaller and financially poor-performing firms compared with the male CFO-led firms, thereby giving support to the glass cliff arguments.
Originality/value
The paper examines the role of CFOs’ gender and board diversity in risk taking as measured by the investment in PPE, debt/equity ratio and stock return volatility.
Subject
Business, Management and Accounting (miscellaneous)
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