Does Gender in the C-Suite Really Matter?

Abstract

This study empirically tests the implications of five theories on the importance of gender in the C-suite, employing two different settings. Specifically, we examine the impact of gender of the Chief Financial Officer (CFO) 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, we find that investors respond relatively less (more) favorably to the appointment of female CFOs compared with that of male CFOs at firms characterized by high (low) uncertainty. Furthermore, the evidence also shows that female CFOs significantly improve operating performance 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. The findings are robust to a battery of robustness checks.