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

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  • Ganji, Gajanan
  • Kale, Arati
  • Kale, Devendra

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.

Suggested Citation

  • Ganji, Gajanan & Kale, Arati & Kale, Devendra, 2024. "“Is cash better with color?” – Do CEOs of color generate higher value of cash?," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004919
    DOI: 10.1016/j.econlet.2024.112007
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    More about this item

    Keywords

    CEO ethnicity; Value of cash; Racial characteristics; Upper Echelons;
    All these keywords.

    JEL classification:

    • G4 - Financial Economics - - Behavioral Finance
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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