How female directors help firms to attain optimal cash holdings

Onur Kemel Tosun, Izidin El Kalak and Robert Hudson

International Review of Financial Analysis, 2022, vol. 80, issue C

Abstract: Is female board representation helpful for firms attaining optimal cash holdings? We address this question using data on 1163 US-listed firms for 2000‐–2017. We show that if there are more female directors on firm boards, ceteris paribus, there is no effect on excess cash holdings implying that female directors are not inclined to be particularly cautious or optimistic. However, in the presence of overly confident CEOs, having more female directors on the board counteracts the tendency of such CEOs to reduce cash holding below an optimal level. Thus, female board representation enhances corporate decision making through effective monitoring and thus, taming CEOs' biased behavior.

Keywords: Female directors; Excess cash; CEO overconfidence; Effective monitoring; Board diversity (search for similar items in EconPapers)
JEL-codes: G30 G32 G38 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:80:y:2022:i:c:s105752192200014x

DOI: 10.1016/j.irfa.2022.102034

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