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Executive gender and capital structure: New evidence from rebalancing events

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  • Krystyniak, Karolina
  • Staneva, Viktoriya

Abstract

Existing literature shows that female-led companies exhibit lower leverage compared to their male-led counterparts, a trend frequently attributed to the traditional view of higher risk aversion among women. We explore firms with female CFOs at or close to their optimal leverage and find that their capital structure is no different than that of firms with male CFOs. We argue that female CFOs reveal their true preferences and risk appetite during significant capital structure adjustments and find that their tolerance for risk aligns closely with that of their male counterparts. Our study challenges the conventional narrative by demonstrating that the financing decisions of top executives are likely not influenced by gender-based psychological differences.

Suggested Citation

  • Krystyniak, Karolina & Staneva, Viktoriya, 2024. "Executive gender and capital structure: New evidence from rebalancing events," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005506
    DOI: 10.1016/j.frl.2024.105520
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    More about this item

    Keywords

    Gender diversity; Risk aversion; Female CFO; Female CEO; Capital structure; Leverage;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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