Firms with female CEOs exhibit a more stable performance

Do female-led firms perform differently than male-led ones? A new IZA Discussion Paper by Pierpaolo Parrotta and Nina Smith investigates this relationship. The authors measure female leadership by CEO gender and composition of the board of directors, thus by the presence of a female chairman and share of women in the boardroom. They then relate female firm leadership to measures of firm performance such as investments, profits, return to equity, and sales. Relying on Danish worker-company data, the authors show that there is no association between a female CEO and the levels of firm performance measures. Yet, there is a significant effect in terms of volatility: female-led firms exhibit a more stable performance over time – a finding which is in line with previous findings in the literature showing that women are more risk-averse decision makers who focus more on monitoring activities and on the implementation of a stricter firm governance.