Wives’ empowerment and corporate financial risk in Chinese family firms

We investigate the economic empowerment of founders’ wives in public Chinese family firms. We show that female cofounders hold higher voting rights when their firms are headquartered in regions where gender stereotypes rooted in local social norms are less prevalent. We also find that firms whose female cofounders wield greater influence, through higher voting rights and more leadership roles, retain more cash, use lower financial leverage, and have lower earnings risk. Our findings have implications on the extension of wives’ marital power in the household to corporate decision-making, as well as on gender difference in the context of risk preference.