Top executive gender, corporate culture, and the value of corporate cash holdings

Sudip Datta, Trang Doan and Francesca Toscano

Journal of Financial Stability, 2023, vol. 67, issue C

Abstract: We document that firms run by female executives are associated with a significantly greater value for their cash holdings. In these firms, the marginal value of one dollar is $1.39, while the comparable value is $0.90 for male managed firms. Further, the marginal value of cash holdings for firms run by female CEOs (CFOs) is $1.56 ($1.47) compared to $0.94 ($0.91) for firms with male CEOs (CFOs). The significant difference in the value of cash holdings may be attributed to the gender-based female executives’ traits that permeate a myriad of corporate decisions with superior outcomes that cumulatively manifest in the market assigning a higher value to cash holdings by these firms. The effect is more pronounced in firms with any of the following characteristics: financially unconstrained, cash distributing, weak governance, low institutional investors’ monitoring, and low audit quality. Adding another new dimension to the literature, we show that corporate culture is a potential determinant of the value of cash holdings. Specifically, we document that female led firms are associated with a more salubrious corporate environment manifesting in a greater value assigned to corporate cash holdings. Our results are robust to a battery of robustness tests.

Keywords: Top executive gender; Gender-based decision making; Value of corporate cash holdings; Corporate culture (search for similar items in EconPapers)
JEL-codes: G32 G41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:67:y:2023:i:c:s1572308923000542

DOI: 10.1016/j.jfs.2023.101154

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