Gender diversity, liquidity and institutional environment in Europe

While substantial evidence is emerging internationally on the higher risk aversion among women compared to men, there is less evidence on the women’ business choices. We explore some of the reasons for a relationship between gender diversity and cash holdings. Specifically, this paper focuses on the choices involving the stock of cash held by companies in which women have executive roles and, as a consequence, can exert a crucial influence on the companies themselves. We find that women presence impact on the level of cash holdings. According to a precautionary reason, our study shows a positive relationship between the presence of women with executive roles in the firm and cash holdings. Notably, the study demonstrates that quality of the institutional context in which the firm is based, have an impact on the relationship between gender diversity and cash holdings. We find that in efficient institutional contexts, the positive effect of their presence in the firm on cash stock grows. We further find that firm’s opportunistic contexts do not impact on the relationship between gender diversity and cash holdings. Moreover, we deepened our analysis by considering different kinds of industries according to their degree of innovation and find that the presence of women with executive roles, increases the amount of cash held especially for high innovative firms. In summary, women, tend to make more conservative choices because they are less overconfident then men. This propensity has an impact on firms when women play a leading role, since they can influence the financial choices of firms themselves