The Impact of CFO Gender on Corporate Overinvestment

Abstract

In this study, we examine the association between CFO gender and corporate investment efficiency, namely the extent of firm-level over-investments. Prior studies show that female CFOs are more risk-averse and conservative than male CFOs when making various corporate accounting and strategic decisions. Consistent with this prediction, we find that the presence of a female CFO is significantly associated with a decreased level of corporate over-investments. Robustness checks of using alternative investment measures and a propensity-score matched sample provide consistent support to this main finding. Overall, we find empirical evidence that indicates firms with female CFOs have an improved corporate investment efficiency by decreased levels of over-investment.