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Gender diversity, cash holdings and the role of the institutional environment: empirical evidence in Europe

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  • Maurizio La Rocca
  • Tiziana La Rocca
  • Raffaele Staglianò
  • Pino Vecellio
  • Fabiola Montalto

Abstract

While substantial evidence is emerging internationally on higher risk aversion among women than among men, there is less evidence on women’s business choices. We explore some of the reasons for the relationship between gender diversity and cash holdings. Specifically, this paper focuses on the choices involving the stock of cash held by firms in which women have executive roles and can consequently exert a crucial influence on the firms themselves. We estimate our proposed empirical models using a dataset of 12,466 observations from 18 European countries. We find a positive relationship between the presence of women with executive roles in the firm and cash holdings. Women tend to make more conservative choices probably because they are more risk averse than men are. This propensity has a relevant impact on the financial choices of firms when women play a leading role. Notably, the study demonstrates that the institutional environment and industry differences moderate our baseline relationship.

Suggested Citation

  • Maurizio La Rocca & Tiziana La Rocca & Raffaele Staglianò & Pino Vecellio & Fabiola Montalto, 2019. "Gender diversity, cash holdings and the role of the institutional environment: empirical evidence in Europe," Applied Economics, Taylor & Francis Journals, vol. 51(29), pages 3137-3152, June.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:29:p:3137-3152
    DOI: 10.1080/00036846.2019.1566687
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    Cited by:

    1. Gull, Ammar Ali & Ahsan, Tanveer & Qureshi, Muhammad Azeem & Mushtaq, Rizwan, 2023. "Striving to safeguard shareholders or maintain sustainability in periods of high uncertainty: A multi-country evidence," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    2. Huixiang Zeng & Limin Zheng & Xiaoyu Li & Yutong Zhang & Linrong Chen, 2023. "Are optimistic CEOs and pessimistic CFOs the best partners? Evidence from corporate cash holdings," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-19, December.
    3. Ardianto Ardianto & Noor Adwa Sulaiman, 2024. "Corporate Cash Holdings and Investment Efficiency: Do Women Directors and Financial Crisis Matter?," JRFM, MDPI, vol. 17(7), pages 1-17, July.
    4. Irfan Ullah & Muhammad Ansar Majeed & Hong-Xing Fang & Muhammad Arif Khan, 2020. "Female CEOs and investment efficiency: evidence from an emerging economy," Pacific Accounting Review, Emerald Group Publishing Limited, vol. 32(4), pages 443-474, November.
    5. Hu, Jiamin & Li, Kailun & Xia, Yifei & Zhang, Jianing, 2023. "Gender diversity and financial flexibility: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 90(C).
    6. Yang, Hanping & Xue, Kunkun, 2023. "Board diversity and the marginal value of corporate cash holdings," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).

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