Evidence abounds that women are discriminated against in the credit markets -- with banks often charging companies headed by females more for loans because they are biased against women.
But companies under the control of female CFOs enjoy, on average, about 11% lower bank-loan prices than do companies with male financial executives, Qiang Wu and Bill Francis of Rensselaer Polytechnic Institute's Lally School of Management and Iftekhar Hassan of Rensselaer Polytechnic Institute's Lally School and the Bank of Finland write in a research paper set to appear in an upcoming Journal of Accounting, Auditing and Finance.
In addition to getting a better rate on the loans, companies with female CFOs get loans with 9% longer maturities (3.8 months longer), and are about 8% less likely to be required to provide collateral than male-CFO companies, the research shows.
Wu, Francis and Hassan attribute the difference, at least in part, to the widespread perception that female executives are more risk-averse, and more likely to produce quality earnings.
"The results support the hypothesis that banks tend to recognize the role of female CFOs in reducing information risk ex ante and default risk ex post, and reward firms with female CFOs with more favorable loan contract terms," they write.
But however the feminine mystique may play out for CFOs, the same does not hold true for other women members of the C-suite, it seems.
"We do not find that the presence of female CEOs and other female top executives affects both prices and non-price loan terms," the paper states. "The results suggest that banks view CFOs, but not CEOs or other executives, as the primary executives who determine the quality of accounting information and the financing decisions of the firms, and in turn affect their lending decisions."
The paper does cautions that "the causality problem" makes the results "hard to interpret." The authors point out: "Female CFOs may not be randomly assigned to firms. Firms with more favorable credit terms may be more likely to hire female CFOs."
Another possible drawback to the study could be its narrow focus. The authors also say: "It is very important to focus not only on the interest rates and other loan terms, but also on the availability of private debt financing, such as the denial rates of bank loans, as denial rates are the first-stage evidence to test whether women are discriminated against."
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