Ceo gender and firm performance

► On average, the gender of the CEO matters in terms of firm performances. ► When CEO is a female the firm risk level is smaller than when CEO is a male. ► Boards are not attending the risk aversion differences when designing the compensation packages. Based on a panel of US firms over the period of 1992 to 2004, we evaluated whether firms managed by female CEOs exhibit the same performance as firms managed by male CEOs. We also examined if the gender of the CEO affects the firm risk level, and if the compensation packages that boards give to female CEOs have less risky components than those given to male CEOs. Our results revealed new insights: on average, the gender of the CEO matters in terms of firm performance. When the CEO is a female, the firm risk level is smaller than when the CEO is a male. Another important finding is that boards are not attending to the risk aversion differences between male and female CEOs when they design the compensation packages, especially equity based compensation, which can be understood as an incentive to female CEOs to take risks.