Are Women CEOs Valuable in Terms of Bank Loan Costs? Evidence from China

Abstract

Given that women CEOs are usually more risk averse, engage less in opportunistic behavior, and provide higher quality earnings than men CEOs, we argue that firms with women CEOs are likely to face lower operational and information risk and thus enjoy cheaper external funds. Using a large sample of Chinese A-share listed firms operating from 2006 to 2012, we find consistent evidence that Chinese banks tend to impose lower loan costs on firms with women CEOs compared to firms with men CEOs. This effect is more pronounced (1) for non-state-owned enterprises than for state-owned enterprises, (2) for firms without political connections than for firms with political connections, and (3) during non-crisis periods. We do not find any significant effects for firms with women chairpersons, CFOs, or directors.