Do Female CEOs Manage Costs Differently? Evidence From Asymmetric Cost Behavior

This article investigates the gender effect on asymmetric cost behavior. We find that firms with female chief executive officers (CEOs) exhibit less cost asymmetry than firms with male CEOs. This finding holds in a range of robustness tests including those that address omitted variable bias and self-selection bias. Cross-sectional tests show that this gender effect is concentrated in the economic downturn period, firms with higher business risk, CEOs with higher personal career concerns, and firms in more competitive product markets, corroborating that females’ risk aversion and competitive preference are underlying mechanisms through which female CEOs manage costs differently compared to male CEOs. We also find supportive evidence of pessimism as an underlying mechanism. Further analysis shows that female CEOs tend to use more flexible costs to adjust resources in response to sales change.