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

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  • Datta, Sudip
  • Doan, Trang
  • Toscano, Francesca
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.

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  • Datta, Sudip & Doan, Trang & Toscano, Francesca, 2023. "Top executive gender, corporate culture, and the value of corporate cash holdings," Journal of Financial Stability, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:finsta:v:67:y:2023:i:c:s1572308923000542
    DOI: 10.1016/j.jfs.2023.101154
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    More about this item

    Keywords

    Top executive gender; Gender-based decision making; Value of corporate cash holdings; Corporate culture;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • 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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