Gender Differences in Financial Reporting Decision-Making: Evidence from Accounting Conservatism

Abstract

This paper investigates the effect of gender on corporate financial reporting decision-making. By focusing on firms that experience changes of CFO from male to female, we compare the firm's degree of reporting conservatism between pre- and posttransition periods. Using various measures of reporting conservatism, we find female CFOs tend to report firm performance more conservatively. Our results also hold after considering the effect of boards of directors, CFO ownership, and concurrent CEO turnover on accounting conservatism. Finally, we find the level of reporting conservatism declines after firms change their CFOs from female to male. Overall, our study implies female CFOs are more risk-averse than male CFOs so that females CFOs adopt more conservative financial reporting policies.

Keywords: Financial reporting; Gender; Conservatism; CFO; Risk-averse

JEL Classification: M41; J16