The Pandemic, Gender, and (Firm) Performance

Do corporate financial decisions made by female executives differ from that of male executives? We try to answer the question by using firm-level data. We identify few critical differences between corporations run by gender-homogeneous versus gender-heterogeneous executive boards using a unique instrumental variable. First, the firms run by heterogeneous groups issue less debt. Second, the heterogeneous boards experience positive asset growth. However, there is no significant difference between the two groups when making an acquisition, market leverage, and equity issuance decisions. These results are robust to industry-level fixed effects, an alternative definition of the gender diversity of a corporate board, and whether a firm has a female CEO. When faced with uncertainty related to the pandemic, both groups make similar decisions regarding capital structure and corporate investment. The results of this study point to the ‘Male Executive Overconfidence’ theory in financial economics.