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

Abstract

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.