Female CEOs and investment efficiency: evidence from an emerging economy

Irfan Ullah, Muhammad Ansar Majeed, Hong-Xing Fang and Muhammad Arif Khan

Pacific Accounting Review, 2020, vol. 32, issue 4, 443-474

Abstract: Purpose - This study aims to investigate how the presence of female CEOs (FCEOs) affects investment efficiency in emerging economy, where female participation in business activities is limited. Design/methodology/approach - This paper investigates the impact of CEO gender on investment efficiency by using investment efficiency measures proposed by Biddleet al.(2009), Chenet al.(2011) and Chenet al.(2013). Findings - The findings suggest that FCEOs are associated with high level of investment efficiency. FCEOs improve corporate governance, streamline management and reduce inefficient investment decisions. In addition, FCEOs focus more on curbing underinvestment than overinvestment when making investment decisions. Furthermore, high financial reporting quality (FRQ) strengthens the effect of FCEOs on investment efficiency. The results suggest that FCEOs do not ameliorate the investment efficiency of state-owned enterprises. Originality/value - This study enhances our understanding of the effects of FCEOs on corporate investment decisions in a male-dominated society. Efficient use of resources is vital from corporate and societal perspectives. Emerging economies are characterized by the unstable political and economic environment and low participation of females in decision-making. Hence, these economies require efficient utilization of resources. This study also sheds light on the role of FCEOs in curtailing underinvestment in emerging economies. It proves that FRQ is important in emerging economies because it strengthens the governance role of FCEOs.

Keywords: Financial reporting quality; Investment efficiency; FCEOs; Under/overinvestment; G31; J16; P31 (search for similar items in EconPapers)
Date: 2020
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:eme:parpps:par-08-2019-0099

DOI: 10.1108/PAR-08-2019-0099

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