Your Company May Be Screwed If It Doesn’t Have A Female CFO
A Lehman Sisters joke would have worked so well here right now but unfortunately Lehman Brothers is closed (probably because they didn’t have a woman CFO.) According to a new study from the Rensselaer Polytechnic Institute, firms under the control of female Chief Financial Officers on average enjoy about 11% lower bank loan prices than firms with male CFOs. Women also won loans with longer maturities and were less frequently required to provide collateral. The research looked at a sample of companies from the S&P 1500 over more than 10 years.The main reason women have better success with bank loans is that they like that women tend to be more risk averse. Isn’t that funny? What women are often criticized for in finance is now helping them succeed. According to recent studies, overconfidence caused men to trade stocks 45% more often than women, thus lowering their net portfolio returns by 2.65% per year (compared with 1.72% lower returns for women traders). Moreover, several studies show a link between profit and gender. Financial companies with several high-ranking women at either officer or director levels tend to have higher earnings per share, return on equity and stock prices than competitors with few or no senior women. Banks often factor in the dependability of accounting information when assessing credit risk, and they usually get to know companies and their top officers well before doling out loans, says Qiang Wu, assistant professor at RPI and co-author of the new study. As a result, banks may “recognize that females could prevent risk-taking behavior and the trouble made by male executives.”
As of June 1 of this year there were 45 female finance officers in the Fortune 500, which means 9% of all CFOs at these companies are women. Eleven new women joined the CFO ranking this year but ten women left since last year so the numbers didn’t improve much. According to CFO.com, women make up 56% of undergraduate accounting majors and almost 62% of accountants and auditors but they rarely make it to very high-level finance positions such as treasurer, controller or CFO.Eleven new women joined the CFO ranking this year but ten women left since last year so the numbers didn’t improve much. According to CFO.com, women make up 56% of undergraduate accounting majors and almost 62% of accountants and auditors but they rarely make it to very high-level finance positions such as treasurer, controller or CFO. In the recent Intelligence Squared debate called “Are Men Finished?”, news pundit Dan Abrams,pointed out that women were beating men in almost all areas of finance and that companies were even launching special training programs for women which encouraged more risk averse investing patterns.
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