The Impact of CFO Gender on Bank Loan Contracting

61 Pages Posted: 5 Nov 2011

See all articles by Bill B. Francis

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Iftekhar Hasan

Fordham University - Gabelli School of Business; Bank of Finland

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 4, 2011

Abstract

Motivated by recent studies that show female CFOs are more risk averse than male CFOs when making various corporate decisions, we examine whether banks take into consideration the gender of CFOs when pricing bank loans. We find that in our sample, firms under the control of female CFOs on average enjoy about 11% lower bank loan price than firms under the control of male CFOs. In addition, loans given to female CFO-led companies have longer maturities and are less likely to be required to provide collateral than loans given to male CFO led companies. Our results are robust to a series of robustness tests, such as a firm and year-fixed effect regression, a Heckman two-stage self selection model, a propensity score match method and a differences-in-differences approach. Overall, our results suggest that banks tend to recognize the role of female CFOs in providing more reliable accounting information ex ante and reducing default risk ex post, and grant firms with female CFOs lower loan price and more favorable contract terms.

Keywords: CFOs, gender, accounting information, bank loans

JEL Classification: M41, G21, J16

Suggested Citation

Francis, Bill B. and Hasan, Iftekhar and Wu, Qiang, The Impact of CFO Gender on Bank Loan Contracting (October 4, 2011). Bank of Finland Research Discussion Paper No. 18/2011. Available at SSRN: https://ssrn.com/abstract=1954548 or http://dx.doi.org/10.2139/ssrn.1954548

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

Troy, NY 12180
United States

Iftekhar Hasan (Contact Author)

Fordham University - Gabelli School of Business ( email )

Rose Hill Campus Bronx
New York, NY 10458
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

110 8th St
Troy, NY 12180
United States
518-276-3338 (Phone)
518-276-8661 (Fax)

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