Female-led Firms Research Articles

CEO GENDER AND FIRM PERFORMANCE: EVIDENCE FROM THE COVID-19 PANDEMIC

The COVID 19 pandemic precipitated an unprecedented deceleration of economic activities and a stock market crash. The unparalleled shock and the altered risk attitudes present a distinctive opportunity to examine whether the well-established concept of the "glass ceiling" is indicative of latent gender differentials in company performance. Utilizing US financial data, the study employs a range of methodologies to examine whether firms led by female CEOs exhibited the same performance as firms led by male CEOs during 2020-2021. Our empirical results confirm previous findings from the finance literature, as we neither find a systematic difference in returns to holding stock in female-led firms, nor a difference in accounting returns between female-led and male-headed firms.

Executive gender and firm leverage decisions: The role of firm ownership and governance

Female leadership in strategic decision-making has received considerable attention in the context of global gender inequality. To advance our understanding of the role of executive gender in corporate financing decisions, we examine whether family firms are less likely to use leverage than their non-family counterparts when they have a female leader (considering CEO and board chair as leadership positions). In addition, we examine whether board independence influences gender differences in the use of leverage in family firms. Drawing on the behavioral agency model (BAM) and socioemotional wealth (SEW) theory, we develop and empirically test our hypotheses using a large dataset of firms from 40 countries. Our results show that family ownership increases the reluctance of female-led firms to use leverage, but board independence mitigates this effect.

Female innovative entrepreneurship and maternity risk

Abstract This article documents the existence of an intensive margin of the gender gap in innovative entrepreneurship. Not only there are fewer women than men who become entrepreneurs, but female entrepreneurs also hold smaller equity stakes, make less substantial investments, and are less frequently appointed as firm executives compared to their male counterparts. Leveraging the context of emergency contraception deregulation in Italy and varying abortion service accessibility, I find that mitigating maternity risk narrows these gaps. Consequently, female-led firms become riskier and more attractive to venture capital investors during their early stages.

Female managers and firm performance: Evidence from the non-agricultural sectors in caribbean countries

This paper investigates whether female-led firms in the Caribbean region are less productive than their male-led counterparts. Whereas previous literature focused on female ownership as a measure of female entrepreneurship overlooking the limited involvement of female owners in the decision-making process, we focus on the gender of the top manager to re-examine the existence of a productivity gap in developing countries, for which evidence is still scarce. Using survey data with gender-related information for firms in non-agricultural private sectors, we apply regression analysis and Blinder-Oaxaca decomposition. We find that female-managed firms in the services sector are on average around 18 per cent less productive than male-managed firms. The main results underscore the role of business constraints in explaining heterogeneous productivity gaps, indicating that female-managed firms encounter greater constraints than their male-managed counterparts. We find that poor access to finance, improper political environment and limited access to electricity mostly affect firms led by women.

Resilience to the pandemic: The role of female management, multi-unit structure, and business model innovation

In this study, we analyse organisational resilience in the context of the recent COVID-19 pandemic. Combining arguments from the resource-based view and ergodicity, we theorise that organisational resilience depends on certain key characteristics of firms and their ability to innovate their business models. Specifically, we focus on female leadership and multi-unit structure as two characteristics that may condition the resource availability of firms during the pandemic and consider firms' innovative actions in response to the pandemic. We test our hypotheses using data from more than 11,000 firms in 34 countries. Our results confirm that female-led firms are less resilient, while multi-unit firms and those that introduced business model innovations are more resilient to the COVID-19 shock. Based on these findings, we suggest management and policy implications for building a firm’s resilience to future disruptions.

Female CEO and FinTech performance: Are senior directors more inclusive?

PurposeThis paper aims to investigate the relationship between gender diversity in CEO positions and FinTech profitability by exploring the moderating role of the average board age on such a relationship.Design/methodology/approachA unique data set of Italian FinTech companies during the 2017–2019 period was used in an ordinary least square model specification. The model is designed to assess the relationship between the presence of a female CEO and FinTech profitability and the moderating role of the average age of governing board members.FindingsThe results of this study indicate that when the average age of the FinTech firm’s board members is relatively low, the profitability of those firms with female CEOs was not significantly different from the profitability of firms with male CEOs. However, among FinTech firms with relatively older board members, the profitability of those firms with a female CEO was lower. This empirical result seems to suggest that older board directors are less prone to recognize female CEO leadership qualities. This supports the need for FinTech firms to adopt good practices in board composition that favor gender inclusion and diversity on board.Originality/valueThe novelty of this study within the literature is that the empirical analysis added new evidence on the relationship between Female CEO and performance by exploring the moderating role of the average age of board members. Moreover, the empirical results of this study suggest specific conditions that could improve the profitability of female-led firms by removing the apparent biased perceptions about the quality of women in leadership among older board members.

Talk the Talk, But Walk the Walk? Female-Managed Firms and Greenwashing Behavior

Previous studies have examined gender differences in environmental disclosure and corporate environmental responsibility, which are elements used to measure greenwashing. However, little attention has been given to the impact of firm leaders’ gender on greenwashing. This study applies a logit econometric model to estimate the probability of being greenwashers for female-led firms compared to male-led firms, using a sample of 7,870 private firms from 28 countries. Our main results suggest that female-managed firms are not less likely to conduct greenwashing. This study also evaluates the impact on greenwashing of other determinants, such as access to finance, firm size, pollution degree, and region, and whether the gender gap in greenwashing is attributed to the primary drivers of greenwashing. Finally, we draw implications from this study on how to enhance the credibility of environmental initiatives for both female-led and male-led firms.

Exploring the impact of innovation intensity on the growth of female-led entrepreneurial firms

PurposeThe purpose of this article is to investigate the relationship between gender, innovation and growth in Italian innovative start-ups.Design/methodology/approachThis is a quantitative study based on a sample of more than 4,600 Italian innovative start-ups. In order to ascertain whether female-led firms that invest more in innovation grow more than their male-led counterparts, sales growth is analysed through a fixed-effects regression over the period 2015–2019. Propensity score matching is also used to check for potential selection bias.FindingsResults reveal that innovation is crucial for start-up growth and, most importantly, that female entrepreneurs exploit the potential of innovative activities for their firm’s growth better than their male peers.Originality/valueThe results provide important evidence on the link between gender and innovation and how these two elements interact for the growth of firms in their early life. Results also provide insights for policymakers to use in designing programs for promoting female entrepreneurship and participation in science.

“The ladies are not for turning”: exploring how leader gender and industry sector influence the corporate social responsibility practices of franchise firms

This study of 246 franchise firms in Spain explores differences in Corporate Social Responsibility (CSR) practices as a function of a leader's gender and the industry sector. The results suggest that female-led firms engage more with normative CSR, while male leadership prompts a more instrumental approach. Overall, B2B companies engage more in instrumental CSR, while there are no significant differences between B2B and B2C firms in normative CSR. Interestingly, the results indicate that female-led firms engage more in CSR practices (normative and instrumental) in the B2B sector compared to B2C. Male-led firms, by contrast, tend to do so more in instrumental CSR in the B2C sector, thus operating more instrumentally when the outlook appears more promising. The results challenge existing theories whereby female-led firms may engage more in CSR in the B2C sector as opposed to B2B. The results support theories proposing that female-led firms adopt more of a stewardship theory approach in the B2B sector, building relationships and social capital through activities such as CSR. The findings extend the state-of-the-art on how gender may influence CSR practices in both type (normative or instrumental) and circumstance (B2B or B2C).

Girls Just Wanna Have Funds? The effect of women-friendly legislation on female-led firms’ access to credit

Does a women-friendly legal environment help women overcome discrimination in credit markets? By examining antidiscrimination laws and their implications for women-led businesses' access to credit in 124 countries, the current study differentiates an effect on discouragement (i.e., not asking for credit when they need it, demand side) and an effect on the probability that they obtain credit (supply side). Legal protections are associated with lower discouragement for women-led firms, but they do not support the attainment of more credit. We demonstrate that enforcement efforts dramatically amplify the effect of women-friendly laws on self-restrictions in terms of credit and enable women-led firms to access more credit. Women are sensitive to the legal environment in which they operate, while banks need strong incentives to change their behavior. This effect is notable with regard to rational discouragement and prevails among smaller firms and in high-income countries. These results are robust to several tests.

Choosing sides: CEO gender and investor support for activist campaigns.

Recent evidence suggests that female-led firms are more likely to be targeted by activist investors. We examine how Chief Executive Officer (CEO) gender influences retail investors' responses to proxy contests. We find that these investors are more likely to support-through their proxy voting behavior-campaigns that target female-led versus male-led firms, despite the fact that retail investors evaluate female and male CEOs similarly. We show that this apparent discrepancy is a function of how subjective ratings mask stereotype-influenced judgments, consistent with the shifting standards model (SSM). Respondents use lower standards to evaluate female versus male CEOs. This difference becomes apparent when externally-anchored judgments are employed, such as when investors are asked to choose sides in a proxy contest. Correspondingly, activists are judged as relatively more competent when targeting female-led firms. Our findings contribute to research on CEO gender and activism. In doing so, our research also introduces the SSM to the investor decision-making literature, thereby enriching the discussion about what mechanisms underpin the less favorable investment outcomes female-led firms can experience. (PsycInfo Database Record (c) 2022 APA, all rights reserved).

No debt no performance? CEO gender matters

We examine the effect of CEO gender on the relation between having no debt and firm performance on a sample of Italian firms. No debt is associated with higher performance for male-led firms but with lower performance for female-led firms. • Does CEO gender influence the relation between having no debt and firm performance? • We perform regressions at the firm-level on a large dataset of 54,000 firms. • No debt is associated with higher performance for male-led firms. • But no debt is associated with lower performance for female-led firms. • We explain these results by stereotypes and gender differences in management style.

Environmental assurance, gender, and access to finance: Evidence from SMEs

When confronting credit constraints, female-led or -owned firms may adopt environmental assurances to increase access to credit. However, this depends on how financial institutions integrate gender diversity and environmental risk into the rating phase of their credit management system. This study uses comprehensive firm-level data from small and medium-sized enterprises (SMEs) across 39 countries to uncover the relationship between environmental assurances and access to finance and to investigate whether this relationship varies by the gender composition of firms. The gender relations of firms are measured in terms of leadership and ownership. We find that environmental assurances have a significant impact on access to finance, although the impact is sensitive to the gender composition of firm leadership. While environmental assurance raises the probability of having loan applications approved for male-led firms, the opposite is true for female-led firms. In general, female ownership does not affect access to finance, regardless of environmental assurances. Collectively, the findings provide policy implications for improving the efficiency of financial markets and managerial implications for evaluating the impacts of firm-gender composition on access to finance.

Female entrepreneurs and productivity around the world: Rule of law, network, culture, and gender equality

• There are more female-led firms in areas with better legal structures, more equal gender norms, and individualistic cultures. • Productivity disadvantage for female-led firms exists in manufacturing but not in service firms, and in small firms. • The disadvantage for female-led firms increases with personal networks, competition, and individualistic culture. • More gender equal environments and a lower burden of chores/care duties on women mitigate the female disadvantage. • Women-led firms do not have static efficiency disadvantage; their dynamic disadvantage drops under more gender equality. We use worldwide firm-level data to study how women-led firms differ from male-led firms in productivity, and investigate potential explanations for these differences. Women-led firms are more prevalent in countries with better rule of law, gender equality, and stronger individualistic culture, and in small firms and services industries. Relative to men-led firms, women-led ones have lower levels and growth of labor productivity, but similar levels of total factor productivity. The disadvantage is mainly in manufacturing firms, nonexistent in service firms, and only in small firms. Furthermore, the disadvantage in performance for women-led firms is smaller for countries with higher gender equality and lower burdens of household chores and domestic care for women. Finally, it is smaller where there is less emphasis on personal networks, less competition from informal firms, and the culture is more collective. The study does not find that the female leader disadvantage is amplified in corrupt environments.

Female entrepreneurship, financial frictions and capital misallocation in the US

We document and quantify the effect of a gender gap in credit access on both entrepreneurship and input misallocation in the US. Female entrepreneurs are found to be more likely to face a rejection on their loan applications and to have a higher average product of capital, a sign of gender-driven capital misallocation that decreases in female-led firms’ access to finance. These results are not driven by differences in observable individual or businesses characteristics. Calibrating a heterogeneous agents model of entrepreneurship to the US economy, we show that the observed gap in credit access explains the bulk of the gender differences in capital allocation across firms. Eliminating such credit imbalance is estimated to potentially increase output by 4%, and to reduce capital misallocation by 12%.

Girls Just Wanna Have Funds? The Effect of Women-Friendly Legislation on Female-Led Firms’ Access to Credit

Girls Just Wanna Have Funds? The Effect of Women-Friendly Legislation on Female-Led Firms’ Access to Credit

An Examination of Rural and Female-Led Firms: A Resource Approach

Previous studies in entrepreneurship research indicate that external funding is critical for entrepreneurial success and that spatial funding inequities between nascent rural and non-rural firms are ever-present. Moreover, women entrepreneurs, rural or otherwise, receive fewer external resources than their male counterparts. To our knowledge there has been no research leveraging the Panel Study of Entrepreneurial Dynamics (PSED), a representative dataset of American individuals trying to create new firms, to better understand differences between rural, non-rural and female-led firms in terms of their ability to stay engaged in the entrepreneurial process and to earn a profit. Using the resource-based theory of the firm, this research will begin to examine some of the critical factors driving rural firm success and rural female-led firm success. We utilize Cox and logistic regression models to analyze the time to quit, time to profit, and the likelihood of firm survival and profit generation for these firms. Results reveal that externally monitored funds are a significant variable for rural firm success in comparison to non-rural firms and appear to be especially important for women-led nascent firms early in the firm gestation process. Future research would benefit from further exploration of funding bias, entrepreneurial motivation and personal characteristics of rural, female-rural and their non-rural counterparts. This research adds to the literature on rural entrepreneurship by using the resource based theory of the firm in conjunction with the PSED database to study the nature of firm success and firm profit for rural and female led rural firms.

Examining How Women CEOs’ Financial Knowledge and Ownership Homophily Affect Venture Performance

We examine the impact of female-led firms’ knowledge of alternative forms of financial capital and its effect on their financial performance as compared to male-led ventures. We contend that women entrepreneurs face unique historical and stereotypical challenges when attempting to enhance their financial knowledge and performance. We utilize social and liberal feminism frameworks, complemented with homophily theory to illustrate how female entrepreneurs can overcome these challenges by increasing the proportion of females in the ownership structure of female-led firms.

Women’s Economic Empowerment in Vietnam: Performance and Constraints of Female-Led Manufacturing SMEs

This paper identifies whether there was a performance difference among micro, small and medium enterprises (MSMEs) led by men and by women in Vietnam during the period 2005–2013 and aims to provide explanations for the differences, if any, in various performance indicators. The paper adopts a quantitative approach using a firm-level panel dataset in the manufacturing sector in 10 provinces/cities in Vietnam in five waves from 2005 to 2013. Fixed effect models are estimated to examine the influence of firm variables and demographic, human capital characteristics of owners/managers on firms’ value added, labor productivity and employment creation. We found that men led MSMEs did not outperform those led by women on average. Although the average value added was lower for female-led firms in the informal sector, the opposite was true in the formal sector where women tend to lead medium-size firms with higher value added and labor productivity. The performance disparity was more envisaged across levels of formality and less clear from a gender perspective. Moreover, while firms owned by businessmen seemed to create more jobs, firms owned by women had a higher share of female employees. No significant difference in business constraints faced by women and by men was found.

Bribe or Die: Gender Differences in Entrepreneurship in Emerging Markets

This paper examines the relation between gender differences in entrepreneurship and firm-level bribery, one of the most impactful business obstacles to private sector growth. Using data from a comprehensive survey covering 16,560 enterprises in 32 emerging economies, we find that female-led firms account for 19.2% of all enterprises, which is approximately 4 times lower than the share of male-led firms, and that female entrepreneurs experience a higher level of bribery than their peers. The impact of gender on bribery is more pronounced among firms located in countries that are more corruption-prone and becomes weaker among countries with a higher female graduation ratio at the tertiary level. In addition, female-run firms have a lower likelihood of obtaining a construction permit, securing a government contract, or holding an operating license. Overall, the results suggest that a bribe-to-survive motive is a possible explanation for the higher level of bribery among female-led firms in emerging markets.