Female leadership and bank risk-taking: Evidence from the effects of real estate shocks on bank lending performance and default risk

Palvia, Ajay A.; Vähämaa, Emilia; Vähämaa, Sami

doi:10.1016/j.jbusres.2020.04.057

Cited by 39 publications

(25 citation statements)

References 47 publications

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“…One explanation behind the scarcity of women as board chair could be related to the concept of “homosociality,” as Holgersson (2013) noticed that male‐dominated boards are more likely to select males for the board positions. Nevertheless, our review found that organizations led by women CEOs and women board chairs are more likely to experience a better firm performance (Palvia, Vähämaa, & Vähämaa, 2014, 2020). Some researchers suggest that this is because women chairs prioritize relationships, the group's advancement, and reputation over their personal gains (e.g., Tuliao & Chen, 2017).…”

Section: Review Of the Literaturementioning

confidence: 90%

“…Gabrielsson (2007) investigated high-tech industries and found that small firms prefer CEO duality because it ensures strong leadership and quick decision making in fast-changing, dynamic environments. Further, for financial institutions, such as commercial banks (Palvia et al, 2014(Palvia et al, , 2020 and microfinance institutions (Strøm, D'Espallier, & Mersland, 2014), scholars noticed that the presence of women CEOs and women board chairs results in a better financial performance. However, being a board chair or CEO of a nonprofit organization (NPO) might be challenging.…”

Section: Industry and Sectormentioning

confidence: 99%

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The role of the board chair—A literature review and suggestions for future research

Banerjee

Nordqvist

Hellerstedt

2020

Corporate Governance

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Research Question/Issue: The role of the board chair has become increasingly complex in recent decades. Research on corporate governance has called for and has initiated the pursuit of more research for the purpose of creating a better understanding of the role of board chairs. We reviewed 234 academic articles published in 66 journals, structured the existing research according to an Input-Process-Outcome-Contexts framework, and provided a future research agenda for studies on the role of the board chair. Research Findings/Insights: Our review reveals that the number of published studies on the position of the board chair has grown over the last two decades. Although extant research is dominated by quantitative studies exploring the impact of the board chair position on financial performance, frequently drawing on agency and stewardship theory, recent work has moved beyond this focus and has added valuable insights. The Input-Process-Outcome-Contexts framework used to structure the extant research reveals that future research should pursue topics related to all components of the framework and that opportunities exist to draw from a broader set of theories. Theoretical/Academic Implications: Based on the framework, we formulate seven specific research topics that can add valuable insights into the role of the board chair and suggest theories that can help inform research pursuing these topics. Taken together, these topics have the potential to create valuable insights into how board chairs are appointed, develop competencies, and interact and work with the CEO, the top management team, the board, and other stakeholders while acknowledging the influence of contextual factors, such as ownership, diversity, the firm's development stage, and external events and trends. Practitioner/Policy Implications: Our review shows a growing global movement toward prescribing more corporate governance regulations and separating the positions of the board chair and the CEO. We show that many aspects need to be considered when choosing a governance configuration and when appointing a board chair because this role is becoming increasingly demanding.

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Section: Review Of the Literaturementioning

confidence: 90%

Section: Industry and Sectormentioning

confidence: 99%

The role of the board chair—A literature review and suggestions for future research

Banerjee

Nordqvist

Hellerstedt

2020

Corporate Governance

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“…An analysis of the leadership of S&P 500 firms ( n = 391) found that firms with female chief financial officers were associated with income-decreasing discretionary accruals, which is in line with sex differences in financial conservatism, risk-aversion, and managerial opportunism ( Peni and Vähämaa, 2010 ). Similarly, a study on 6,971 American commercial banks reported that banks with female CEOs and board chairs were associated with better lending performance and lower default risk in the aftermath of severe real estate price shocks relative to male-led banks, suggesting that female leadership may lead to less risky corporate outcomes ( Palvia et al, 2020 ). These findings are corroborated by a study on Norwegian firms, which reported that introducing gender-balancing quotas that increased women’s representation as firm directors significantly reduced firm risk, though it adversely affected the performance of firms ( Yang et al, 2019 ).…”

Section: Psychobehavioral Sex Differencesmentioning

confidence: 99%

Pandemic Leadership: Sex Differences and Their Evolutionary–Developmental Origins

Luoto

Varella

2021

Front. Psychol.

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The COVID-19 pandemic has caused a global societal, economic, and social upheaval unseen in living memory. There have been substantial cross-national differences in the kinds of policies implemented by political decision-makers to prevent the spread of the virus, to test the population, and to manage infected patients. Among other factors, these policies vary with politicians’ sex: early findings indicate that, on average, female leaders seem more focused on minimizing direct human suffering caused by the SARS-CoV-2 virus, while male leaders implement riskier short-term decisions, possibly aiming to minimize economic disruptions. These sex differences are consistent with broader findings in psychology, reflecting women’s stronger empathy, higher pathogen disgust, health concern, care-taking orientation, and dislike for the suffering of other people—as well as men’s higher risk-taking, Machiavellianism, psychopathy, narcissism, and focus on financial indicators of success and status. This review article contextualizes sex differences in pandemic leadership in an evolutionary framework. Evolution by natural selection is the only known process in nature that organizes organisms into higher degrees of functional order, or counteracts the unavoidable disorder that would otherwise ensue, and is therefore essential for explaining the origins of human sex differences. Differential sexual selection and parental investment between males and females, together with the sexual differentiation of the mammalian brain, drive sex differences in cognition and behavioral dispositions, underlying men’s and women’s leadership styles and decision-making during a global pandemic. According to the sexually dimorphic leadership specialization hypothesis, general psychobehavioral sex differences have been exapted during human evolution to create sexually dimorphic leadership styles. They may be facultatively co-opted by societies and/or followers when facing different kinds of ecological and/or sociopolitical threats, such as disease outbreaks or intergroup aggression. Early evidence indicates that against the invisible viral foe that can bring nations to their knees, the strategic circumspection of empathic feminine health “worriers” may bring more effective and humanitarian outcomes than the devil-may-care incaution of masculine risk-taking “warriors”.

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“…found that firms with female chief financial officers were associated with income-decreasing discretionary accruals, which is in line with sex differences in financial conservatism, risk-aversion, and managerial opportunism (Peni and Vähämaa, 2010). Similarly, a study on 6,971 American commercial banks reported that banks with female CEOs and board chairs were associated with better lending performance and lower default risk in the aftermath of severe real estate price shocks relative to male-led banks, suggesting that female leadership may lead to less risky corporate outcomes (Palvia et al, 2020). These findings are corroborated by a study on Norwegian firms, which reported that introducing gender-balancing quotas that increased women's representation as firm directors significantly reduced firm risk, though it adversely affected the performance of firms (Yang et al, 2019).…”

Section: Risk-takingmentioning

confidence: 68%

Pandemic leadership: Sex differences and their evolutionary–developmental origins

Luoto¹,

Varella²

2020

Preprint

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The COVID-19 pandemic has caused a global societal, economic, and social upheaval unseen in living memory. There have been substantial differences in the kinds of policies implemented by political decision-makers to prevent the spread of the virus, to test the population, and to manage infected patients. Among other factors, these policies vary with politicians’ sex: early findings indicate that, on average, female leaders seem more focused on minimizing direct human suffering caused by the SARS-CoV-2 virus, while male leaders implement riskier short-term decisions, possibly aiming to minimize economic disruptions. These sex differences are consistent with broader findings in psychology, reflecting women’s stronger empathy, higher pathogen disgust, health concern, care-taking orientation, and dislike for the suffering of other people—as well as men’s higher risk-taking, Machiavellianism, psychopathy, narcissism, and focus on financial indicators of success and status. This review article contextualizes sex differences in pandemic leadership in an evolutionary framework. Evolution by natural selection is the only known process in nature that organizes populations of organisms into higher degrees of functional order, or counteracts the unavoidable disorder that would otherwise ensue, and is therefore essential for explaining the origins of human sex differences. Differential sexual selection and parental investment between males and females, together with the sexual differentiation of the mammalian brain, drive sex differences in cognition and behavioral dispositions, underlying men’s and women’s leadership styles and decision-making during a global pandemic. We propose the sexually dimorphic leadership specialization hypothesis to explain how general psychobehavioral sex differences have been exapted during human evolution to create sexually dimorphic leadership styles. They may be facultatively co-opted by societies when facing different kinds of ecological and/or sociopolitical threats, such as disease outbreaks or intergroup aggression. Early evidence indicates that against the invisible viral foe that can bring nations to their knees, the strategic circumspection of empathic feminine health “worriers” may bring more effective and humanitarian outcomes than the devil-may-care incaution of masculine risk-taking “warriors”.

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Female leadership and bank risk-taking: Evidence from the effects of real estate shocks on bank lending performance and default risk

Cited by 39 publications

References 47 publications

The role of the board chair—A literature review and suggestions for future research

The role of the board chair—A literature review and suggestions for future research

Pandemic Leadership: Sex Differences and Their Evolutionary–Developmental Origins

Pandemic leadership: Sex differences and their evolutionary–developmental origins

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