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Gender Differences in Financial Reporting Decision Making: Evidence from Accounting Conservatism
Author(s) -
Francis Bill,
Hasan Iftekhar,
Park Jong Chool,
Wu Qiang
Publication year - 2014
Publication title -
contemporary accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.769
H-Index - 99
eISSN - 1911-3846
pISSN - 0823-9150
DOI - 10.1111/1911-3846.12098
Subject(s) - dividend , conservatism , accounting , business , equity (law) , risk aversion (psychology) , compensation (psychology) , actuarial science , economics , finance , psychology , financial economics , political science , social psychology , expected utility hypothesis , politics , law
This paper investigates the effect of CFO gender on corporate financial reporting decision making. Focusing on firms that experience changes of CFO from male to female, the paper compares the firms' degree of accounting conservatism between pre‐ and post‐transition periods. We find that female CFO s are more conservative in their financial reporting. In addition, we find that the relation between CFO gender and conservatism varies with the level of various firm risks, including litigation risk, default risk, systematic risk, and CFO ‐specific risk such as job security risk. We further find that the risk aversion of female CFO s is associated with less equity‐based compensation, lower firm risk, a higher tangibility level, and a lower dividend payout level. Overall, the study provides strong support for the notion that female CFO s are more risk averse than male CFO s, which leads female CFO s to adopt more conservative financial reporting policies.