INFLUENCE OF CEO GENDER ON CORPORATE RISK-TAKING AND CAPITAL ALLOCATION EFFICIENCY

NBR Volume-5 Issue-1 2023

INFLUENCE OF CEO GENDER ON CORPORATE RISK-TAKING AND CAPITAL ALLOCATION EFFICIENCY

Saba Tabassum
Faculty of Management Sciences, Riphah International University, Islamabad. Pakistan

Zeeshan Ghafoor*
Faculty of Management Sciences, Riphah International University, Islamabad. Pakistan

Aamer Shareef
Faculty of Management Sciences, Riphah International University, Islamabad. Pakistan

ABSTRACT

Purpose: This paper aims to study the impact of CEO gender on a firm’s risk-taking decisions and related corporate resource allocation efficiency using data collected from UK and USA-based firms.

Design/Methodology: This study is empirical research and employs the Panel data regression approach. The study uses cross-country panel data comprising 69 companies (30 companies from the UK (LSE) and 39 companies from the USA (NYSE) during the time period 2012-2020.

Findings: The regression results show a positive impact of CEO gender on corporate risk-taking when leverage is taken as a key variable for measuring risk. On the other hand, CEO gender is observed to have a negative relationship with corporate risk when risk is measured through the standard deviation of ROA. Likewise, the gender of the CEO negatively impacts the efficiency of capital allocation.

Originality: This study enriches the available literature by relating the conservative leanings of females to risk-taking behavior and capital allocation. In addition to contributing to literature discussing CEOs’ characteristics with impact on firm performance, the findings of the study add to the existing literature by showing that CEO gender is also an important factor influencing corporate choices.

Keywords: CEO gender, Corporate risk, Capital allocation efficiency, Resource allocation efficiency

Paper type: Research Paper

Received: 20 April 2023
Revised: 19 June 2023
Accepted: 20 June 2023
Published: 13 July 2023

Full-Length Paper: PDF

DOI: https://doi.org/10.37435/NBR23042001

This is an open-access article under the CC BY 4.0 license