What role does gender play when it comes to making key company decisions? And what is the attitude to risk among women CEOs?
These were the key questions addressed in a piece of research co-authored by MBS academics which explored the relationship between CEO gender and corporate risk-taking choices.
Researchers Roberto Mura and Maria Marchica, along with professor Mara Faccio from Purdue University, US, wanted to test – in the context of corporate decisions at a very high (CEO) level – previous findings which had shown that on average men tended to be less risk-averse than women.
Using a large sample of privately-held and publicly-traded European companies, of which nearly 10% were run by female CEOs, the team documented that this difference persists at the top of the corporate ladder. Female CEOs did indeed tend to be associated with lower levels of risk taking.
In the sample, firms run by female CEOs were less leveraged and had less volatile earnings, while companies which had recently changed their CEO from a man to a woman also observed a statistically significant decline in corporate risk-taking. On the other hand, their research found that companies run by women were more likely to survive than firms run by male CEOs.
Roberto, senior lecturer in finance, says the findings have major policy implications given the drive by Western governments to promote more women into the boardroom. For instance, Norway recently passed a law requiring that women make up 40% of the boards of public companies.
“Our findings raise some interesting policy questions and cast serious doubts on the ‘one size fits all’ approach to policy making. For instance, is giving a top job to a woman necessarily always the best choice for the business itself if she is more likely to be more risk-averse? Is the company restricting its future growth potential, and that of the wider economy, by having a woman in charge? Or does the relative risk averseness of a woman actually help a company survive, especially when the business is in a start-up phase?
“By imposing blanket quotas on what percentage of women should be on company boards, are we at risk of introducing legislation that may ultimately lead to businesses being less bold or are we promoting a different entrepreneurial spirit? Also, what about the consequences in terms of allocation of capital in the whole economy? Our results seem to indicate that differences between female and male CEOs play an important role in this context too.”
The findings were recently presented at the American Finance Association conference in Boston. Added Roberto: “We see this as very much a starting point for further research into this extremely significant policy area.”
Friday, May 26, 2017
Did you know starting a business is one of the main reasons for studying an MBA? Our Full-time MBA candidates have lots of opportunities to develop their entrepreneurship skills.
Friday, May 19, 2017
Although awareness of mental health issues has greatly increased in recent years, far more still needs to be done to tackle it in the workplace.
Thursday, May 11, 2017
Low-cost oil producers will start to question why there are rationing supplies and this will have “huge implications” for the oil market, said Spencer Dale, Group Chief Economist at BP. Addressing the annual BP lecture at Alliance MBS, Dale – a former chief economist at the Bank of England – said in no other industry could you have a country such as Saudi Arabia, where it costs just $10 to produce a barrel of oil, operating in the same market as a country like Canada where it costs $30 to $40.
Tuesday, May 2, 2017
Despite the ‘compelling” business case for having more women on company boards the move towards gender equality in the boardroom has stalled. Our Vital Topics panel debate on ‘Diversity at the top’ heard that there remained a complex and often contradictory array of reasons as to why more women did not hold senior management positions. For instance there are still only seven female CEOs in the FTSE 100 today.
Monday, May 1, 2017
The Financial Times’ new ranking of Top MBAs for Finance sees Alliance Manchester Business School ranked 29th in the world and positioned as 5th in the UK and 10th in Europe.
Wednesday, April 26, 2017
One of the world’s leading university ranking groups, QS (Quacquarelli Symonds), has today ranked Alliance Manchester Business School’s Global MBA as 5th in the world.
Tuesday, April 11, 2017
Charities, businesses and community groups across the world will be able to streamline and improve their response to emergencies and disasters, thanks to a new International Standard initiated at Alliance Manchester Business School.
Monday, April 10, 2017
The opportunities and threats posed by machine learning were debated during a lecture by serial entrepreneur Hermann Hauser at Alliance MBS.