Study: Women CFOs Get Better Bank Loans

As Bloomberg recently reported, female chief financial officers (CFOs) are on the rise at a time when other top executive positions remain elusive. As more women step into this crucial role, the burgeoning research on the “gender effect” has revealed intriguing implications, including findings in a new study from the Journal of Accounting, Auditing & Finance, which reveals that firms with female CFOs enjoy better bank loan contracts:

JAF_home-coverBased on recent empirical work showing that female CFOs report more conservative and high-quality accounting numbers, and are more likely to reduce the risk level of the firm, we hypothesize that as inside lenders, banks should recognize the benefits of female CFOs in reducing information risk ex ante and default risk ex post, and reward borrowers with female CFOs with more favorable loan contract terms.

Our empirical results support our hypotheses. We find that, in our sample, firms with female CFOs, on average, enjoy about 14 basis points lower bank loan prices than firms with male CFOs. In addition, loans given to female-CFO-led companies have 3.8-monthlonger maturities and are 8% less likely to be required to provide collateral when compared with loans given to male-CFO-led companies.

Click here to continue reading “The Impact of CFO Gender on Bank Loan Contracting,” published by Bill Francis of Rensselaer Polytechnic Institute, Iftekhar Hasan of Fordham University, and Qiang Wu of Rensselaer Polytechnic Institute in the January 2013 issue of the Journal of Accounting, Auditing & Finance — and don’t forget to sign up for e-alerts to stay on top of the latest finance-related research.

This entry was posted in Finance, Gender Issues and tagged , , , , by Cynthia Nalevanko, Senior Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Senior Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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