Gender diversity, cash holdings and the role of the institutional environment: empirical evidence in Europe. Issue 29 (21st June 2019)

• Record Type: Journal Article
• Authors: La Rocca, Maurizio; La Rocca, Tiziana; Staglianò, Raffaele; Vecellio, Pino; Montalto, Fabiola
• Is Part Of: Applied economics. Volume 51:Issue 29(2019)
• Page Start: 3137
• Page End: 3152
• Publication Date: 2019-06-21
• Subjects: Gender diversity -- women -- cash holdings -- institutional context; G30 -- G38 -- J16 -- K22; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2019.1566687
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: While substantial evidence is emerging internationally on higher risk aversion among women than among men, there is less evidence on women's business choices. We explore some of the reasons for the relationship between gender diversity and cash holdings. Specifically, this paper focuses on the choices involving the stock of cash held by firms in which women have executive roles and can consequently exert a crucial influence on the firms themselves. We estimate our proposed empirical models using a dataset of 12, 466 observations from 18 European countries. We find a positive relationship between the presence of women with executive roles in the firm and cash holdings. Women tend to make more conservative choices probably because they are more risk averse than men are. This propensity has a relevant impact on the financial choices of firms when women play a leading role. Notably, the study demonstrates that the institutional environment and industry differences moderate our baseline relationship.