Female CEOs and SME’s financing decision: evidence from firm-level data

What is it about?

Recent studies claim that females are risk-averse and prefer less risky financing compared to their male counterparts, thus females on board tend to use less risky financing. We tested this argument by investigating the relationship between female CEO and firm financing decisions. The study has used firm-level data from 2,700 Small and Medium Enterprises (SMEs) in the Chinese economy and posit new evidence that female CEO financing decision is not always inclined to use less risky financing. The female CEO financing decision varies if we account for female ownership, foreign ownership, state ownership, firm association with big firms, and the industry sector in which the firm is operating. This study also provides robust evidence that female CEO utilize debt financing subject to certain conditions and female CEO prefers long-term debt financing compared to short-term debt financing while considering debt maturity choices. Thus we contribute to corporate governance literature and this study implies corporate financing policy.

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