Your gender identity is who you are: Female chief executive officers and corporate debt structure

Abstract

Using a large sample of S&P 1500 firms during 1993–2021, we empirically examine the implications of CEO gender on corporate debt structure. We find that after controlling for endogeneity, firms managed by female CEOs issue less debt than those managed by male CEOs. Female CEOs being more risk averse than male CEOs is the underlying mechanism which drives the negative relation between female CEOs and firm leverage. Further, we find that the effect of CEO gender is more pronounced when the firm's CEO is younger, the litigation risk is higher, and the market is more competitive. In terms of debt structure, firms managed by female CEOs prefer to maintain positive debt capacity and have longer debt maturities. Finally, we show that CEO gender has a stronger impact on debt structure than CFO gender. Taken together, our evidence suggests that there exist gender differences in terms of corporate debt borrowing decision making.