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Female CEOs and investment efficiency: evidence from an emerging economy

Irfan Ullah (School of Accounting, Dongbei University of Finance and Economics, Dalian, China)
Muhammad Ansar Majeed (International Business School, Zhejiang Gongshang University, Hangzhou, China)
Hong-Xing Fang (School of Accounting, Dongbei University of Finance and Economics, Dalian, China)
Muhammad Arif Khan (School of Economics and Management, Dalian University of Technology, Dalian, China)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 6 November 2020

Issue publication date: 11 December 2020

878

Abstract

Purpose

This study aims to investigate how the presence of female CEOs (FCEOs) affects investment efficiency in emerging economy, where female participation in business activities is limited.

Design/methodology/approach

This paper investigates the impact of CEO gender on investment efficiency by using investment efficiency measures proposed by Biddle et al. (2009), Chen et al. (2011) and Chen et al. (2013).

Findings

The findings suggest that FCEOs are associated with high level of investment efficiency. FCEOs improve corporate governance, streamline management and reduce inefficient investment decisions. In addition, FCEOs focus more on curbing underinvestment than overinvestment when making investment decisions. Furthermore, high financial reporting quality (FRQ) strengthens the effect of FCEOs on investment efficiency. The results suggest that FCEOs do not ameliorate the investment efficiency of state-owned enterprises.

Originality/value

This study enhances our understanding of the effects of FCEOs on corporate investment decisions in a male-dominated society. Efficient use of resources is vital from corporate and societal perspectives. Emerging economies are characterized by the unstable political and economic environment and low participation of females in decision-making. Hence, these economies require efficient utilization of resources. This study also sheds light on the role of FCEOs in curtailing underinvestment in emerging economies. It proves that FRQ is important in emerging economies because it strengthens the governance role of FCEOs.

Keywords

Acknowledgements

The authors are especially grateful to two anonymous referees for their insightful and constructive suggestions. They appreciate helpful comments from Khalil Jebran on the initial draft of the manuscript.

Citation

Ullah, I., Majeed, M.A., Fang, H.-X. and Khan, M.A. (2020), "Female CEOs and investment efficiency: evidence from an emerging economy", Pacific Accounting Review, Vol. 32 No. 4, pp. 443-474. https://doi.org/10.1108/PAR-08-2019-0099

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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