Investigating the relationship between Managers' Gender Diversity and Financial Leverage with respect to the moderating role of CEO Power

Subject Areas :

حبیب اله نخعی ¹ , بهاره کریم زاده ² , سهیل صیادی لطف آبادی ³

1 - دانشیار، گروه حسابداری، واحد بیرجند، دانشگاه آزاد اسلامی، بیرجند، ایران. آدرس پست الکترونیکی: [e-mail]
2 - نویسنده مسئول، دانشجوی دکتری، گروه حسابداری، واحد بیرجند، دانشگاه آزاد اسلامی، بیرجند، ایران. آدرس پست الکترونیکی: [e-mail]
3 - دانشجوی دکتری، گروه حسابداری، واحد بیرجند، دانشگاه آزاد اسلامی، بیرجند، ایران. آدرس پست الکترونیکی: [e-mail]

Received: 2023-03-04 Accepted : 2023-06-15 Published : 2023-05-22

Keywords: Keywords: Gender diversity of managers, Financial leverage and CEO power,

Abstract :

AbstractThis research has investigated the relationship between gender diversity of managers and financial leverage, considering the moderating role of the CEO's power in the capital market (Tehran Stock Exchange). In this research, relying on the existing theories, the answer to this question was investigated whether the influence of female managers on the leverage of the company is moderated by the power of the CEO or not. Advanced research, by testing the efficiency of scientific topics and developing applied knowledge about the correlation between variables in order to adapt to the previous theoretical literature, from the aspect of the applied goal, from the aspect of the quantitative research process, from the aspect of the method of collecting and analyzing information. Descriptive correlation and logically, it is an inductive research. In order to test the hypotheses in the research models, the information of the companies accepted in the Tehran Stock Exchange during the period 1390 to 1399 was used for the main purpose of the research. The information of 143 companies was collected, processed and analyzed by appropriate descriptive statistics methods and inferential statistical methods to identify the type of composite data and using R statistical software. The results showed that there is a significant relationship between the gender ratio of managers and the financial leverage of the company. There is a significant relationship between the existence of female gender among the managers and the financial leverage of the company. CEO power does not moderate the relationship between managers' gender ratio and firm's financial leverage. The power of the CEO does not moderate the relationship between the presence of female gender among managers and the company's financial leverage.Keywords: Gender diversity of managers, Financial leverage and CEO power.

References:

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- Adams, R.B., 2016. Women on boards: the superheroes of tomorrow? Leadersh. Q. 27, 371–386.
- Adams, R.B., Almeida, H., Ferreira, A., 2005. Powerful CEOs and their impact on corporate performance. Rev. Financ. Stud. 18, 1403–1432.
- Adams, R.B., Funk, P., 2012. Beyond the glass ceiling: does gender matter? Manag. Sci. 58 (2), 219–235.
- Adams, R.B., Ragunathan, V., 2017. Lehman Sisters. Available at SSRN: https://ssrn.com/abstract=3046451.
- Agnew, J., Balduzzi, P., Sund´en, A., 2003. Portfolio choice and trading in a large 401(k) plan. Am. Econ. Rev. 93, 193–215.
- Banal Estanol, A., Siciliani, P., & Yoon, K. (2022). Competition, profitability and financial leverage. Bank of England working papers 962, Bank of England.
- Barber, B.M., Odean, T., 2001. Boys will be boys: gender, overconfidence, and the common stock investment. Q. J. Econ. 116, 261–292.
- Beattie, V., Goodacre, A., Thomson, S.J., 2006. Corporate financing decisions: UK survey evidence. J. Bus. Financ. Acc. 33, 1402–1434 (9) & (10).
- Bebchuk, L.A., Cremers, K.M., Peyer, U.C., 2011. The CEO pay slice. J. Financ. Econ. 102, 199–221.
- Berger, A.N., Kick, T., Schaeck, K., 2014. Executive board composition and bank risk taking. J. Corp. Finan. 28, 48–65.
- Bernile, G., Bhagwat, V., Yonker, S., 2018. Board diversity, firm risk, and corporate policies. J. Financ. Econ. 127 (3), 588–612.
- Bertrand, M., 2011. New perspectives on gender. In: Handbook of Labor Economics, 4, pp. 1543–1590. Part B
- Carter, M.E., Franco, F., Gine, M., 2017. Executive gender pay gaps: the roles of female risk aversion and board representation. Contemp. Account. Res. 34 (2),1232–1264.
- Charness, G., Gneezy, U., 2012. Strong evidence for gender differences in risk taking. J. Econ. Behav. Organ. 83 (1), 50–58.
- Chasan, E., Murphy, M., 2013. New job, new steppingstones. Wall Street J. B7.
- Cronqvist, H., Makhija, A.K., Yonker, S.E., 2012. Behavioral consistency in corporate finance: CEO personal and corporate leverage. J. Financ. Econ. 103 (1), 20–40.
062 / ............. بررسی رابطه تنوع جنسیتی مدیران و اهرم مالی باتوجهبه نقش...
- Croson, R., Gneezy, U., 2009. Gender differences in preferences. J. Econ. Lit. 47 (2), 448–474.
- Cumming, D., Leung, T.Y., Rui, O., 2015. Gender diversity and securities fraud. Acad. Manag. J. 58 (5), 1572–1593.
- Eckbo, B.E., Thorburn, K.S., 2003. Control benefits and CEO discipline in automatic bankruptcy auctions. J. Financ. Econ. 69 (1), 227–258.
- Faccio, M., Marchica, M.T., Mura, R., 2016. CEO gender, corporate risk-taking, and the efficiency of capital allocation. J. Corp. Finan. 39, 192–209.
- Feng, M., Ge, W., Luo, S., Shevlin, T., 2011. Why do CFOs become involved in material accounting manipulations? J. Account. Econ. 51, 21–36.
- Finkelstein, S., 1992. Power in top management teams: dimensions, measurement, and validation. Acad. Manag. J. 35, 505–538.
- Francis, B., Hasan, I., Park, J.C., Wu, Q., 2015. Gender differences in financial reporting decision making: evidence from accounting conservatism. Contemp. Account. Res. 32, 1285–1318.
- Frank, M.Z., Goyal, V.K., 2007. Corporate Leverage: How Much Do Managers Really Matter? (Working paper).
- Friedman, H.L., 2014. Implications of power: when the CEO can pressure the CFO to bias reports. J. Account. Econ. 58, 117–141.
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- Gupta, V.K., Mortal, S., Chakrabarty, B., Guo, X., Turban, D.B., 2020. CFO gender and financial statement irregularities. Acad. Manag. J. 63 (3), 802–831.
- Hackbarth, D., 2008. Managerial traits and capital structure decisions. J. Financ. Quant. Anal. 43 (4), 843–881.
- Ham, C., Lang, M., Seybert, N., Wang, S., 2017. CFO narcissism and financial reporting quality. J. Account. Res. 55, 1089–1135.
- Haynes, K.T., Hillman, A., 2010. The effect of board capital and CEO power on strategic change. Strateg. Manag. J. 31, 1145–1163.
- Huang, J., Kisgen, D.J., 2013. Gender and corporate finance: are male executives overconfident relative to female executives? J. Financ. Econ. 108, 822–839.
- Khanna, V., Kim, E.H., Lu, Y., 2015. CEO connectedness and corporate fraud. J. Financ. 70, 1203–1252.
- Korkeam¨aki, T., Liljeblom, E., Pasternack, D., 2017. CEO power and matching leverage preferences. J. Corp. Finan. 45, 19–30.
- Levi, M., Li, K., Zhang, F., 2014. Director gender and mergers and acquisitions. J. Corp. Finan. 28, 185–200.
- Li, Y., Zeng, Y., 2019. The impact of top executive gender on asset prices: evidence from stock price crash risk. J. Corp. Finan. 58, 528–550.
- Mamun, M.A., Balachandran, B., Duong, H.N., 2020. Powerful CEOs and stock price crash risk. J. Corp. Finan. 62, 101582.
- Matsa, D.A., Miller, A.R., 2013. A female style in corporate leadership? Evidence from quotas. Am. Econ. J. Appl. Econ. 5, 136–169.
- Meyers-Levy, J., Loken, B., 2015. Revisiting gender differences: what we know and what lies ahead. J. Consum. Psychol. 25, 129–149.
فصلنامه مطالعات کمی در مدیریت...................................................................... / 113
- Modigliani, F., Miller, M.H., 1958. The cost of capital, corporation finance and the theory of investment. Am. Econ. Rev. 48 (3), 261–297.
- Morse, A., Nanda, V., Seru, A., 2011. Are incentive contracts rigged by powerful CEOs? J. Financ. 66, 1779–1821.
- Nini, G., Smith, D.C., Sufi, A., 2012. Creditor control rights, corporate governance, and firm value. Rev. Financ. Stud. 25 (6), 1713–1761.
- Olsen, R.A., Cox, C.M., 2001. The influence of gender on the perception and response to investment risk: the case of professional investors. J. Psychol. Fin. Mark. 2 (1), 29–36.
- Schopohl, L., Urquhart, A., & Zhang, H. (2021). Female CFOs, leverage and the moderating role of board diversity and CEO power. Journal of Corporate Finance, 71, https://doi.org/10.1016/j.jcorpfin.2020.101858.
- Shoham, A., Lee, S.M., Khan, Z., Tarba, S.Y., Ahammad, M.F., 2020. The effect of board gender diversity on cross-listing. J. Corp. Finan. 65, 101767.
- Uhde, D.A., Klarner, P., Tuschke, A., 2017. Board monitoring of the chief financial officer: a review and research agenda. Corp. Govern. Int. Rev. 25, 116–133.
- Wangrow, D.B., Schepker, D.J., Barker III, V.L., 2015. Managerial discretion: an empirical review and focus on future research directions. J. Manag. 41, 99–135