The Impact of Gender in the Context of Performance Feedback and Business Risk

Performance feedback provides information about the company's achieved performance compared to the aspiration level. Undoubtedly such feedback influences the decisions that business leaders make for the future, primarily with regard to business risk. However, business risk is a very general term. Since research and development is one of the riskiest investments within a company, many studies have focused on the influence of performance feedback on this variable. Admittedly, this led to mixed results. Subsequent studies have therefore proposed moderator factors that can influence the relationship between performance above or below the aspiration level and research and development. As such, the importance of the size and age of the company and the organizational reserve in this relationship was confirmed. However, environmental factors and characteristics of the CEO have not yet been examined. This research focuses on the importance of CEO gender. More specifically, since literature shows that men are generally riskier than women, male CEOs are expected to positively influence the impact of performance below or above aspiration levels on the measure of corporate risk. As a dependent variable, however, this study does not focus on research and development, as this variable is not available in the Belgian annual accounts, but on the internal cash flow of a company, which has a positive relationship with investments in research and development. The data were obtained from public financial databases on the one hand and from a cross-sectional survey completed by 448 Flemish entrepreneurs on the other. The analyses show that there is a positive effect on the dependent variable when performance is above the aspiration level, and a negative effect when performance is below the aspiration level. However, CEO gender did not appear to have a significant influence on these relationships.