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CEO Gender, Corporate Risk-Taking, and the Efficiency of Capital AllocationMara FaccioPurdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI) Maria-Teresa MarchicaUniversity of Manchester - Manchester Business School Roberto MuraUniversity of Manchester - Manchester Business School November 21, 2012 Abstract: We show that CEO gender helps explain corporate decision making. In particular, we document that firms run by female CEOs have lower leverage, less volatile earnings, and a higher chance of survival than firms run by male CEOs. The results are robust to various tests for endogeneity, including firm fixed effects and change specifications, propensity score matching, a switching regression analysis with endogenous switching, and a treatment effects model. We further document that this risk-avoidance behavior appears to lead to distortions in the capital allocation process. These results have important macroeconomic implications for long-term economic growth.
Number of Pages in PDF File: 49 Keywords: gender, risk-taking, capital allocation JEL Classification: G31, G32, J16 working papers seriesDate posted: March 14, 2012 ; Last revised: January 20, 2013Suggested CitationContact Information
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