“Is cash better with color?” – Do CEOs of color generate higher value of cash?

Gajanan Ganji, Arati Kale and Devendra Kale

Economics Letters, 2024, vol. 244, issue C

Abstract: We investigate the impact of CEO ethnicity on the value of cash. We find that CEOs of color generate higher value of cash. For each dollar held, CEOs of color generate an additional $1.04 compared to white CEOs. Our results are robust to alternative proxies for CEOs of color, changes to model specifications, fixed effect choices, sub-sample analysis, and matched sample analysis. Since CEOs of color have to meet more rigorous standards, we conjecture that it is likely that CEOs of color are more skilled and/or show higher confidence since they have a higher bar to cross than white CEOs. This allows such CEOs to extract higher value of cash. Hence, they juice more value out of cash held.

Keywords: CEO ethnicity; Value of cash; Racial characteristics; Upper Echelons (search for similar items in EconPapers)
JEL-codes: G4 G40 G41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004919

DOI: 10.1016/j.econlet.2024.112007

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