Why female board representation matters: The role of female directors in reducing male CEO overconfidence in corporate decisions

Jie Chen, Woon Sau Leung, Wei Song (w.song@swansea.ac.uk) and Marc Goergen
Additional contact information
Jie Chen: Cardiff Business School, Cardiff University
Woon Sau Leung: Cardiff Business School, Cardiff University
Wei Song: School of Management, Swansea University

No 2018-12, Working Papers from Swansea University, School of Management

Abstract: We provide novel manifestations why female board representation matters. We find that male CEOs at firms with female directors are less likely to be overconfident as they hold fewer deep-in-the-money options. Female directors are associated with less aggressive investment policies, better acquisition decisions, and improved firm performance. This is the case for industries with high overconfidence prevalence, but not for those with low overconfidence prevalence. Finally, firms with female directors experience less of a drop in performance during the 2007-2009 financial crisis. These results are consistent with the view that female directors improve firm outcomes through reducing male CEO overconfidence in corporate decisions.

Keywords: Female board representation; CEO overconfidence; Investment; Firm performance. (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2018-02-24
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:swn:wpaper:2018-12

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