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CEO Gender, Corporate Risk-Taking, and the Efficiency of Capital Allocation

51 Pages Posted: 14 Mar 2012 Last revised: 16 Feb 2016

Mara Faccio

Purdue University - Krannert School of Management; University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Maria-Teresa Marchica

University of Manchester - Manchester Business School

Roberto Mura

University of Manchester - Manchester Business School

Date Written: February 12, 2016

Abstract

We extend the literature on how managerial traits relate to corporate choices by documenting that firms run by female CEOs have lower leverage, less volatile earnings, and a higher chance of survival than otherwise similar firms run by male CEOs. Additionally, transitions from male to female CEOs (or vice-versa) are associated with economically and statistically significant reductions (increases) in corporate risk-taking. The results are robust to controlling for the endogenous matching between firms and CEOs using a variety of econometric techniques. We further document that this risk-avoidance behavior appears to lead to distortions in the capital allocation process. These results potentially have important macroeconomic implications for long-term economic growth.

Keywords: CEO, gender, risk-taking

JEL Classification: G31, G32, J16

Suggested Citation

Faccio, Mara and Marchica, Maria-Teresa and Mura, Roberto, CEO Gender, Corporate Risk-Taking, and the Efficiency of Capital Allocation (February 12, 2016). Available at SSRN: https://ssrn.com/abstract=2021136 or http://dx.doi.org/10.2139/ssrn.2021136

Mara Faccio (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Maria-Teresa Marchica

University of Manchester - Manchester Business School ( email )

Crawford House
Oxford Road
Manchester M13 9PL
United Kingdom
+44(0)1612750121 (Phone)
+44(0)1612754023 (Fax)

HOME PAGE: http://www.personal.mbs.ac.uk/mmarchica/index.htm

Roberto Mura

University of Manchester - Manchester Business School ( email )

Crawford House
Oxford Road
Manchester, Lancashire M13 9PL
United Kingdom
+44 (0) 161 275 4023 (Fax)

HOME PAGE: http://www.robertomura.com

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