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DOES GENDER MATTER IN ANALYST EARNINGS FORECAST

ACCURACY? THE EFFECT OF CFO GENDER AND ANALYST GENDER

Sudip Datta*
Department of Finance
Mike Ilitch School of Business
Wayne State University
5201 Cass Avenue
Detroit, MI 48202
sdatta@wayne.edu

Trang Doan
Department of Finance
Mike Ilitch School of Business
Wayne State University
5201 Cass Avenue
Detroit, MI 48202

Mai Iskandar-Datta
Department of Finance
Mike Ilitch School of Business
Wayne State University
5201 Cass Avenue
Detroit, MI 48202

* Corresponding author

Preliminary draft (February 14, 2017).


Please do not quote without authors' permission.



DOES GENDER MATTER IN ANALYST EARNINGS FORECAST
ACCURACY? THE EFFECT OF CFO GENDER AND ANALYST GENDER

Abstract

This study examines the impact of gender on analyst forecast accuracy. First, we show that
female CFOs improve the accuracy of analyst forecasts compared to their male counterparts.
Second, we document that a transition from a male to a female CFO leads to an improvement in
the accuracy of analyst forecasts for firms with high information asymmetry due to improved
transparency. Our findings complement and extend previous research showing that female CFOs
enhance firms reporting and disclosure quality. Further, we provide evidence suggesting that
female analysts, due to their lower level of overconfidence, produce more accurate forecasts than
their male counterparts. The results are more pronounced when considering the CFOs gender.
Our results are validated by a series of robustness tests.
DOES GENDER MATTER IN ANALYST EARNINGS FORECAST
ACCURACY? THE EFFECT OF CFO GENDER AND ANALYST GENDER

I. INTRODUCTION

Research on gender-based differences in accounting and financial decision-making has

gained significant importance in recent years. Prior research documents that female chief

financial officers (CFOs) tend to pursue more informative and credible disclosures (Francis,

Hasan, Park, and Wu 2015; Liu, Wei, and Xie 2014; Peni and Vhmaa 2010). Additionally,

studies on gender diversity in the board of directors (Gul, Srinidhi, and Ng 2011; Srinidhi, Gul,

and Tsui 2011), audit committee members (Thiruvadi and Huang 2011), and senior managers

(Krishnan and Parsons 2008) also document a positive relation between female

directors/executives and financial reporting quality. These results are attributed to womens risk-

aversion and/or more ethical sensitivities leading to a more conservative and transparent

reporting policy, better monitoring, and less earnings management.

A separate stream of literature examines the connection between the quality of firms

financial disclosure and analyst forecast accuracy, measured in terms of forecast error, forecast

dispersion, and forecast revision (Hui and Matsunaga 2015). Although the Securities and

Exchange Commission (SEC) sets minimum disclosure requirements for all public firms, the

quantity and quality of information provided vary largely across firms (Lang and Lundholm

1996). Most evidence supports the view that the accuracy of analyst forecasts increases with the

informativeness of the disclosure and the amount of details provided, representing both financial

and nonfinancial transparency of firms (Barron, Kim, Lim, and Stevens 1998; Barron and

Stuerke 1998).

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However, the current literature is silent on how the CFOs gender determines analyst

earnings forecast accuracy. Further, there is currently no evidence on how the CFOs gender and

the analysts gender interact in determining earnings forecast accuracy. In other words, we do not

know whether an analysts gender influences earnings forecast accuracy in the condition of the

CFOs gender. We posit that if female CFOs are associated with better disclosure quality and

more transparent reporting standards compared to their male counterparts, then we should

generally observe more accurate analyst forecasts for companies with female CFOs.

Additionally, we contend that the if female analysts are less overconfident or have better

forecasting abilities than their male counterparts, then the gender-based differences in forecast

earnings should manifest in more accurate forecasts by female analysts. We expect the difference

in forecast accuracy between male and female analysts to be more prominent in a less transparent

environment (i.e., higher information uncertainty and lower disclosure quality) where the

benefits of superior forecasting abilities can be amplified.

First, we attempt to examine the impact of the CFOs gender by addressing the following

questions: Does the CFOs gender determine the accuracy of analyst forecasts? How does

analyst forecast accuracy change following a CFO appointment? Extending our analysis, we also

argue that the impact of a CFO transition on forecast accuracy will be more pronounced in firms

associated with greater uncertainty and information asymmetry. We then address the question:

How is the relation between the CFOs gender and the accuracy of analyst forecasts affected by

the firms information environment?

Our CFO replacement sample also allows us the opportunity to investigate whether an

analysts gender has any impact on his/her forecast accuracy. We address how the CFOs gender

and that of the analysts interact in determining the accuracy of the forecasts. Further, to the

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extent that most of the information that analysts use in their estimates is provided by the firm, we

argue that the impact of an analysts gender on his/her forecast accuracy will not be consistent

across all firms but will depend on the firms reporting and disclosure quality, which in turn is

dependent on the CFOs gender.

Finding answers to these questions will add new dimensions to the analyst earnings

forecasts literature. Our study contributes to the emerging stream of literature on the influence of

gender on accounting and financial decision-making and outcomes. In this arena, we shed light

on the effect of gender on earnings predictability by considering the CFOs gender, the analysts

gender, and the interaction of the two.

Using a sample of 721 CFOs appointed during the period 19942007, we examine how

the CFOs gender affect the accuracy of analyst forecasts both before and after the appointment.

We then investigate whether firms experience a relative improvement in analyst earnings

forecast accuracy when a transition from a male to a female executive takes place. To ensure that

we capture the impact of CFOs gender on analyst forecast accuracy, we control for other

potential factors, such as education (Becker 1964) and work experience (Ericsson and Lehmann

1996) by hand-collecting data on the CFOs qualifications and professional experience prior to

the hiring date.

Given that the accuracy of analyst forecasts is directly associated with information

transparency, which is a combination of the firms environmental uncertainty (Atiase 1985;

Zhang 2006) and disclosure quality (OBrien and Bhushan 1990; Baginski and Hassell 1990), we

also consider the firms environment. In particular, the benefits of an informative financial report

to financial analysts would be amplified when they have to provide earnings forecasts in a high

uncertainty environment. To the extent that high research and development (R&D) firms and

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small firms are more likely to be associated with a higher degree of uncertainty and information

asymmetry (Aboody and Lev 2000; Douthett, Jung, and Kwak 2004; Atiase 1985; Freeman

1987), comparative improvement in analyst forecasts for such firms are expected to be more

pronounced when there is a switch from a male to a female CFO.

The empirical results are consistent with our predictions. First, we document that female

CFOs lead to significant improvement in analyst forecast accuracy. The results can be attributed

to the fact that female CFOs, who are typically characterized by past researchers to have high

risk-aversion, high ethical behavior, and/or less overconfidence compared to their male

counterparts, tend to improve financial reporting and disclosure quality, thereby making the

information environment more transparent and conducive to more accurate analysts forecasts.

Second, we find that a transition from a male CFO to a female CFO, in general, does not result in

a significant increase in analysts forecast accuracy. However, when we consider the firms

informational environment, analyst forecast accuracy significantly improves for firms associated

with a transition from male CFO to female CFO. Particularly, for firms in high uncertainty (or

high information asymmetry) environments where we expect greater informational benefits from

improved disclosure quality, the increase in analyst forecast accuracy due to the transition from a

male to a female CFO becomes significant. Finally, our investigation into the effect of analysts

gender on forecast accuracy shows that female analysts, due to their lower degree of

overconfidence, tend to provide more accurate forecasts than their male counterparts. Further,

the superiority of female analyst earnings predictability is more pronounced for firms with new

male CFOs due to more opaque information environment at these firms. This finding leads us to

conclude that female analysts forecasts are more accurate in less transparent environments

where a lower level of overconfidence would be greatly valued.

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Our findings contribute to the growing literature on gender-based differences in

accounting and financial decision-making and outcomes, as well as to the body of research on

analysts earnings forecasts. First, this study contributes to the literature on how female CFOs

reporting policies differ from those of male CFOs (Francis et al. 2015; Liu et al. 2014; Peni and

Vhmaa 2010; Huang and Kisgen 2013) by documenting that the effect of CFO's gender on

information transparency manifests in analysts forecast accuracy. Second, our findings contribute

to studies examining the relation between an analysts gender and his/her forecast accuracy

(Kumar 2010; Green, Jegadeesh, and Tang 2009). We extend this line of research by

documenting that the analyst forecast accuracy is not only a function of the analysts gender but

also the CFOs gender. Moreover, we show that forecast accuracy is also influenced by the

interaction of the CFO gender and analysts gender.

In the next section, we review the current literature and develop hypotheses. Section III

describes the data and methodology. We present our empirical results in Section IV. Section V

concludes.

II. LITERATURE REVIEW AND HYPOTHESES

The past two decades have witnessed two major changes in the U.S. corporate

environment. First, public corporations have witnessed a significant increase in the amount of

information required by financial and reporting regulations. Second, there has been a rapid

growth in the number of female C-Suite executives in positions that were conventionally

dominated by men (Fortune, 2004). Information transparency in organizations has increasingly

attracted attention from academics and policymakers, especially after several serious financial

scandals that have weakened the credibility of corporate accounting and reporting systems since

2001 (e.g., Enron, WorldCom) (see Albaum and Peterson 2006; Chavent, Ding, Fu, Stolowy, and

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Wang 2006). The effort to improve the quality and quantity of information in capital markets is

demonstrated by, for example, the changes in segment disclosures, employee stock option

reporting, and the passage of the Sarbanes-Oxley Act (Lehavy, Li, and Merkley 2011). On the

other hand, the fact that the number of female CFOs in S&P 1500 companies has been on an

upward trend over the last three decades (Francis, Hasan, and Wu 2013) has also led to greater

attention from researchers regarding their impact on firm outcomes.

Considering the systematic gender-based behavioral differences and the crucial role of

the CFO in the financial reporting process, this phenomenon is expected to affect the degree of

firm disclosure and transparency. Further, as the proportion of intangible assets has steadily

increased in U.S corporations, it has become an even more challenging environment to forecast

earnings with any degree of accuracy (Lev and Gu 2016). In such an environment, it is fruitful to

identify additional determinants, such as the gender of the CFO and that of the analyst that can

influence the accuracy of earnings forecasts and earnings predictability.

Disclosure policy and analysts forecasts

Financial analysts play a very important role in the capital markets. They produce

earnings forecasts, buy/sell/hold recommendations, and other information relevant to different

market participants. To the extent that a good portion of the information that analysts use in their

estimates is provided directly by the firm, the accuracy of their forecasts must be considerably

influenced by the credibility of the firms financial reports, voluntary disclosures, information

revealed during conference calls, and earnings guidance. Prior studies show that firms can reduce

information asymmetries and improve the accuracy of analyst forecasts by adopting more

forthcoming and/or more conservative disclosure practices (OBrien and Bhushan 1990;

Baginski and Hassell 1990).

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Although SEC imposes minimum disclosure requirements on all publicly traded firms,

the quantity and quality of both mandatory and voluntary financial reports provided to the capital

markets vary substantially across firms (Lang and Lundholm 1996). Empirical literature suggests

a significant relation between corporate disclosure credibility and analyst forecast accuracy (Hui

and Matsunaga 2015).

To examine analyst forecast accuracy, we utilize three measures: forecast error, forecast

dispersion, and forecast revision. The first measure, forecast error, captures the difference

between actual earnings and the median analysts earnings forecasts. It is not only a proxy for

corporate transparency, information availability, and uncertainty (see e.g., Barry and Brown

1985; Botosan, Plumlee, and Xie 2004; Zhang 2006) but is also related to the analysts

evaluation of a firms financial disclosures (Lang and Lundholm 1996).1 Given that a firms

financial reports provide analysts with useful information about future earnings, analyst forecast

error should decrease with the informativeness and credibility of a firms disclosure.

The second measure, forecast dispersion, has also been widely used in previous literature

to capture two theoretical components, the uncertainty about future performance and the degree

of consensus among analysts (Barron and Stuerke 1998; Barry and Jennings 1992; Abarbanell,

Lanen, Verrecchia 1995). While the level of dispersion represents the uncertainty about the

firms future cash flows or future economic performance, the change in dispersion represents

information asymmetry between firms and analysts (Barron et al. 1998). Empirical evidence

shows that firms with more informative disclosure policies have less dispersion among

individual analysts forecasts, consistent with the notion that dispersion in analysts earnings


1
Analysts evaluate a firms disclosure quality based on its annual published information, other published
information, and investor relations.

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forecasts serves as a useful indicator of uncertainty about the price relevant component of firms

future earnings (Barron and Stuerke 1998).

Due to its frequency and timeliness, analyst forecast revision has played an important role

in dissipating information about future earnings and have become a crucial source of information

for most market participants (Gleason and Lee 2000). To evaluate the quality of a firms

disclosure, the Financial Analysts Federation (FAF) considers the timeliness of information

releases. Firms that disclose information on an ongoing basis are assessed as having more

informative disclosure policies than those withholding information until a mandatory disclosure

is required. Mahoney (1991) supports this idea by arguing that disclosure is beneficial, in part,

because it reduces the incidence of significant surprises for investors and analysts. Accordingly,

a high quality disclosure policy, one that is more forthcoming and more transparent, is expected

to lower the volatility in forecast revisions (Lang and Lundholm 1996).

The CFOs gender and analyst forecast accuracy

The literature on the impact of gender on corporate governance and information

transparency can be attributed to the behavioral differences in the level of risk-aversion and/or

ethical sensitivities between men and women. A large body of research has focused on the

gender-based difference in risk-taking and suggests that women are likely to have lower risk-

tolerance than men (e.g., Barsky, Juster, Kimball, and Shapiro 1997). Hence, women are more

conservative managers. Prior studies support this hypothesis by showing that female managers

tend to reduce the risk level of firms (Khan and Vieito 2013; Martin, Nishikawa, and Williams

2009; Faccio, Marchica, and Mura 2013), are more conservative in their financial reporting

(Francis et al. 2015; Peni and Vhmaa 2010; Barua, Lin, and Sbaraglia 2010), and are less

likely to manipulate earnings (Liu et al. 2014) than male managers.

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Previous empirical research investigating the impact of gender on board monitoring,

board decisions, and public disclosure also documents that female directors are more risk-averse

and are better at monitoring than their male counterparts (Adams and Ferreira 2009; Nielson and

Huse 2010; Gul et al. 2011). Additionally, women are found to be more unwilling to adopt high-

variance strategies (Vandergrift and Brown 2005) as well as exhibit greater financial risk-

aversion when investing than men (Jianakoplos and Bernasek 1998).

The second stream of research on gender-based decision-making emphasizes the

difference in the level of ethical sensitivities between men and women. The gender-ethics theory

perceives women as more sensitive to ethical concerns, such as disclosure, integrity, and

conflicts of interests. Women are also perceived to be more conservative in their ethical

viewpoints, and tend to pursue higher moral standards compared to men (Tyson 1990; Ho, Li,

Tam, and Zhang 2015). Prior empirical evidence supports this view by showing that female

executives and female directors are associated with less earnings management (Krishnan and

Parsons 2008), report more conservative earnings (Ho et al. 2010), and are less likely to engage

in fraud (Cumming, Leung, and Rui 2015).

Although most studies support a positive link between female executives/directors and

financial reporting quality, some of them attribute this relation to womens risk-averse

characteristic (Francis et al. 2015; Liu et al. 2016), while others attribute it to womens

inherently more ethical behavior (Krishnan and Parsons 2008), or both (Ho et al. 2015;

Cumming et al. 2015). Hence, the impact of gender on disclosure quality (if any) cannot

distinguish between the two theories of risk-aversion and gender-ethics.

Prior empirical work on the relation between the CFOs gender and disclosure policies

shows a positive link between female executive representation and reporting quality. In

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particular, female CFOs tend to be more conservative in their financial reporting (Francis et al.

2015), follow more conservative earnings management strategies (Peni and Vhmaa 2010;

Barua et al. 2010), are less likely to manipulate earnings (Liu et al. 2014), and display less tax

aggressiveness (Francis, Hasan, and Wu 2014). Also, Kim and Chung (2014) document that

switching from male to female CFOs improves the readability of annual reports, thereby

reducing information asymmetry. Overall, to the extent that a firms disclosure policy is a

product of executives risk-taking behavior, willingness to provide informative and credible

information, and aggressiveness in reporting earnings, female CFOs, who is generally more

conservative, less aggressive, and more ethical in their financial reporting would result in more

transparent financial disclosures, thereby should engender more accurate analyst forecasts. We

therefore propose the following hypotheses:

H1: To the extent that female CFOs tend to improve disclosure quality, the accuracy of
analyst forecasts will be higher in firms with female CFOs.

CFO transition and the change in analyst forecast accuracy

Provided that there is a relationship between the CFOs gender and analyst forecast

accuracy, a CFO replacement event would have different effects on the accuracy of analyst

forecasts depending on the gender of the predecessor and of the successor. Particularly, if female

CFOs indeed provide a higher quality of disclosure compared to their male counterparts, then we

expect that a transition from a male to a female CFO (M-F) would have a positive effect on the

accuracy of analyst forecasts over other types of CFO transitions, namely, male to male (M-M),

female to female (F-F), and female to male (F-M). Based on this line of reasoning, we propose

the following hypotheses:

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H2: To the extent that female CFOs tend to improve the quality of firm disclosure, a
transition from a male to a female CFO will lead to a comparative improvement in
analyst forecast accuracy following the appointment compared to other CFO transition
categories.

Information environment and analyst forecast accuracy

Theoretically, a switch from a male to a female CFO is expected to lead to a significant

increase in analyst forecast accuracy compared to other types of CFO transitions due to evidence

showing female CFOs enhance forecast accuracy by providing high-quality disclosure. However,

we believe that the superiority of an M-F transition does not necessarily hold for all firms but

depends on the firms information environment for two reasons. First, the accuracy of analyst

forecasts following a CFO replacement is expected to be impaired by the uncertainty about the

new CFO. Second, although new female CFOs, with their high reporting standards, can enhance

the firms level of transparency and thus mitigate the analysts uncertainty, their impact on

analyst forecast accuracy is dependent on the firms information uncertainty (Zhang 2006). More

specifically, the benefits of an informative financial report to financial analysts would be

amplified in a high uncertainty environment. In other words, we predict that the relative

improvement in analyst forecasts due to a switch from a male to a female CFO will be more

pronounced among firms operating in less transparent environments. We examine two variables

that are known to impact firms informational asymmetry -- R&D intensity and firm size.

R&D intensity

Past research documents that R&D investments are distinct from other types of capital

assets and are associated with higher information asymmetry for several reasons. First, because

of uniqueness of R&D investments compared to other tangible assets, the degree of information

asymmetry attached to them is larger (Douthett et al. 2004). This is evidenced by findings that it

is harder for outside market participants such as financial analysts or investors to evaluate R&D

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projects (Lev and Gu 2016) and the fact that insider trading profits are significantly higher for

firms with more investment in R&D (Aboody and Lev 2000). Second, the absence of organized

markets for R&D exacerbates the information asymmetry because there are no comparable asset

prices from which market participants can derive information (Aboody and Lev 2000). Finally,

unlike the marking-to-market method applied for most financial investments, accounting rules

applied for R&D also contribute to its information asymmetry problem by uniformly expensing

it in financial statements and thus providing no updated market-based information about changes

in R&D value to outsiders (Aboody and Lev 2000). Taken together, high R&D firms tend to

suffer from greater information uncertainty than low R&D firms, and thus the benefit of having

high reporting quality from hiring a female CFO would be more pronounced for high R&D

firms.

Firm size

Firm size is another proxy for the degree of information asymmetry. Prior literature

suggests a positive association between firm size and the amount of information available to

market participants (Atiase 1985; Freeman 1987; Bhushan 1989). In other words, smaller firms

are expected to have more severe information asymmetry than larger firms because of their

relative scarcity of information, which can possibly be due to: (i) fewer financial analysts

following (Elliot, Morse, and Richardson 1984) and (ii) stock prices that are not as efficient in

reflecting information. Previous studies show that insiders in small firms are more likely to take

advantage of private information and earn significantly higher profits than those in large firms

(Lakonishok and Lee 2001; Finnerty 1976; Seyhun 1986). Further, Williams (1986) hypothesizes

that the small-firm effect may actually be the information asymmetry effect. Overall, we expect

that the benefit of hiring a female CFO to the firms information transparency would be more

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pronounced among small firms. Taken together, we propose the following hypothesis relating

CFO gender, the firms information environment and analyst forecast accuracy.

H3: To the extent that female CFOs tend to improve disclosure quality, firms associated
with more information asymmetry (high R&D firms or small firms) will experience a
more pronounced improvement in analyst forecast accuracy when there is a transition
from a male to a female CFO in those firms compared to other transition categories.

The analysts gender and forecast accuracy

Prior studies provide a limited and inconsistent evidence of the impact of gender-based

differences on financial analysts forecast accuracy (Kumar 2010; Green et al. 2009). We

propose three hypotheses related to the potential differences in forecast accuracy between male

and female analysts, namely, the overconfidence, the self-selection, and the network hypotheses.

Overconfidence hypothesis

The overconfidence of an individual is defined as the tendency to overestimate the

accuracy of his/her knowledge and abilities. Comprehensive evidence from the psychology

literature indicates that while both women and men are overconfident, men are more

overconfident than women (e.g., Griffin and Tversky 1992). Recent studies in the finance and

accounting literatures document that female managers and female investors are less

overconfident than their male counterparts (e.g., Barber and Odean 2001; Huang and Kisgen

2013; Malmendier and Tate 2008). In contrast, Ge, Matsumoto, and Zhang (2011) and Hardies,

Breesch, and Branson (2012) find no significant gender-based differences in the level of

overconfidence among CFOs and auditors.

Prior research on financial analysts suggests a negative relation between overconfidence

and forecast accuracy (Friesen and Weller 2006; Hilary and Menzly 2006). This result is

attributed to the fact that overconfident analysts tend to overestimate the precision of their

private information by overweighting their input while discounting public signals. Given the

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above reasoning, female analysts may provide more accurate forecasts (less upward biased) due

to their relatively lower degree of overconfidence compared to their male counterparts.

H4a: To the extent that female analysts are less overconfident than their male
counterparts, female analysts earnings forecasts would be more accurate than that of
male analysts following the new CFO appointment.

Self-selection hypothesis

Within the framework of the self-selection literature, only women with above average

abilities would choose a male-dominated career such as the analyst profession (Atkinson, Baird,

and Frye 2003; Kumar 2010). Supporting his conjecture, Kumar (2010) documents that female

analysts produce more accurate forecasts than their male counterparts, which he attributes to self-

selection. Further, Kumar finds that female analysts superior skills are recognized by market

participants as they respond more strongly to the forecast revisions made by female analysts in

spite of the fact that those analysts receive less media coverage. Kumar (2010) also shows that

female analysts are relatively more optimistic in their forecasts than their male counterparts,

which he attributes to two reasons. First, while this result is inconsistent with the psychological

evidence, which suggests that men tend to be more optimistic, it is consistent with the self-

selection hypothesis, which posits that only skillful and male-like female analysts would be

able to pursue this career. Second, female analysts, with their superior skills, face lower

employment risk. Overall, according to the self-selection framework, we propose the following

hypothesis regarding the analysts gender and forecast accuracy.

H4b: To the extent that only women with above average abilities pursue the analyst
profession, female analysts earnings forecasts would be more accurate but not less
optimistic than that of male analysts following the new CFO appointment.

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Network hypothesis

Given that analysts forecasts are made based on both public and private information

collected by the analyst, accessibility to information plays a very important role in determining

forecast accuracy. Consequently, analysts with greater access to informal information and

external contacts are expected to provide more accurate forecasts than the others. Prior literature

posits that men network more effectively than women. For example, businessmen are believed to

obtain valuable information through their old boy network (Campbell 1975; Danzig and Wells

1993). Further, Bell, Randall, and Williams (1995) document that the old boy network is one

of the factors that limit womens participation in the upper echelons. This hypothesis is

empirically supported by Green, Jegadeesh, and Tang (2009) who find that female analysts

forecasts tend to be less accurate than those of male analysts.2 Hence, we propose the following

hypothesis.

H4c: To the extent that male analysts have greater access to informal information, male
analysts earnings forecasts would be more accurate than that of female analysts
following the new CFO appointment.

Hypotheses H4a and H4b predict that female analysts will be associated with more

accurate forecasts, while hypothesis H4c provides tension by predicting that male analysts will

be more accurate due to their better networking abilities.

Information environment

As shown for female CFOs, female analysts abilities may also be more valuable in firms

where the information environment is less transparent. That is, the benefits from less

overconfidence and/or self-selection can be more pronounced in more opaque environments, in

this case, the opacity is due to the gender of the CFO. To be specific, for firms with female CFOs

2
However, their results have some limitations since they neither control for firms characteristics nor
account for potential omitted time-specific effects.

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(who tend to have high quality reporting and disclosure), we expect no systematic difference in

forecast accuracy between male and female analysts simply because of availability of

information and more transparency. However, the impact of an analysts gender on his/her

forecast accuracy will be pronounced for firms with male CFOs who tend to be more opaque in

terms of information disclosure. Based on this line of reasoning, we propose the following

hypotheses:

H5: Female analysts earnings forecasts would be more accurate and more pronounced
than those of male analysts for firms hiring male CFOs.

III. SAMPLE, DATA, AND RESEARCH METHOD

Sample formation and data sources

Our initial sample is based on the CFO appointments during the period 19942007 of

S&P 1500 firms in ExecuComp. A manager is classified as a CFO if his/her title is composed of

phrases such as chief financial officer, chief finance officer, CFO and other similar titles.

The CFOs characteristics such as gender, age, and tenure are also collected from ExecuComp.

We then verify the year of CFO appointment for each company from various sources. We

eliminated all interim or acting CFOs and CFOs for whom the information available from public

sources contradicted that available in ExecuComp. To examine the impact of the CFO transition,

we require that the new CFOs tenure with the firm is at least two years subsequent to the

appointment. Finally, firms are required to have financial information in COMPUSTAT and

Center for Research in Security Prices (CRSP) databases. Our initial sample is composed of

1,176 CFO appointments

CFOs qualifications are collected manually from multiple sources such as

Businessweek.com, Zoominfo.com, Forbes.com, firms annual reports, and other publicly

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available information sources. Information about job experience of each executive prior to

his/her appointment is obtained from BusinessWeek.com and other online sources. CFOs are

recorded as having broad managerial experience if they had previously served as CEOs, chief

operating officers, general managers of a division, oversaw international operations, or held a

high position unrelated to accounting or finance. We then collected information on whether the

executive held a CFO position prior to joining the current firm and the age of the executive at the

time of appointment.

We then merge our initial sample of 1,176 CFO transitions with the Institutional Brokers'

Estimate System (I/B/E/S) to obtain analyst forecasts data, analyst code, and the last name and

the first initial of each analyst. The sample with analyst forecasts and the names of the analysts is

composed of 721 CFO appointments.

To form the gender-identified analysts sample, we start by obtaining the full name of

each analyst. Because I/B/E/S provides only the last name and the first name initial of the

analyst, we manually searched Bloomberg Terminal to identify the analysts first name. We

excluded analysts whose full names cannot be found or if there were multiple analysts with the

same last name and first name initial. The gender of the analyst is then identified by his/her first

name using http://www.genderchecker.com and https://gender-api.com. We deleted analysts

whose names are gender-neutral. The final sample consists of 2,348 gender-identified financial

analysts in the fiscal year-end following the CFO appointment. Among them, 243 analysts are

female, accounting for 10.35% of the sample.

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Research design

The CFOs gender and analyst forecast accuracy

To assess the link between the CFOs gender and analyst forecast accuracy, we employ

the following equation that also includes industry and year fixed effects to account for any

potential omitted industry-specific effects and year-specific effects.

ForecastAccuracyit = 0 + 1(Female CFO)it + 2-9(Firm variables)it-1 + it (1)

We run our regressions on two samples. The first one, pre-appointment, includes all firm-

years within two years before the appointment, years (t-2) and (t-1). The second regression is

based on post-appointment and includes all firm-years within two years after the appointment,

years (t+2) and (t+1). Our test variable is Female CFO, which equals one if the gender of the

current CFO is female, and zero otherwise.

Dependent variables. The accuracy of analyst forecasts (ForecastAccuracy) is measured

along three dimensions: forecast error, forecast dispersion, and forecast revision, as discussed

earlier. Following (Lang and Lundholm 1996; Zhang 2006), we measure forecast error (FE) as

the absolute value of the difference between the median of analyst forecasts made within eight

months prior to a firms fiscal year-end and the I/B/E/S actual earnings, scaled by beginning

stock price. Forecast dispersion (FD) is defined as the standard deviation of analysts forecasts

made within eight months prior to a firms fiscal year-end, scaled by beginning stock price. For

each firm-year, we require at least four forecasts to calculate the standard deviation of earnings

forecasts. Forecast revision (FR) is the mean of the standard deviation of individual analyst

revisions made within eight months prior to a firms fiscal year-end, scaled by beginning stock

price. Accordingly, the accuracy of analyst forecasts increases when forecast error, forecast

dispersion, and forecast revision decrease.

18
Control variables. We control for firm characteristics, such as analyst coverage, leverage,

PPE (Property, plant and equipment), earnings-to-price ratio (EP), loss, growth opportunity,

ROA, and volatility. Analyst coverage is measured as the number of I/B/E/S analysts that report

estimates for each firm in a fiscal year (Lang and Lundholm 1996). Leverage represents the ratio

of long-term debt to total assets. PPE is reflected by the proportion of property, plant and

equipment to total assets. EP is the earnings-to-price ratio. Loss is a dummy variable with the

value of 1 if EP is negative, and zero otherwise. To measure the growth opportunity, we use the

market-to-book ratio (MTB), which is computed as the book value of assets less the book value

of equity plus the market value of the equity, scaled by total book value of assets. ROA

represents the return on total assets. Finally, we include a measure of volatility, namely,

idiosyncratic risk (Volatility), which is defined as the sum of the squared residual (it) from the

Fama-Frenchs (1993) three-factor model as in Equation (2) using the daily return data from

CRSP.

rit = 0 + 1rmkt,t + 2rsmb,t + 3rhml,t + it (2)

where rit is the daily stock excess returns, rmkt,t is the market excess returns, rsmb,t is the

returns on the SMB factor, rhml,t is the returns on the HML factor.

All firm control variables are measured as of the prior fiscal year-end. Variables are

winsorized at one percent cutoff at both tails to limit the influence of outliers. P-values are

calculated using Whites heteroskedasticity-corrected standard errors.

CFO transition and change in analyst forecast accuracy

We examine the change in analyst forecast accuracy when a M-F switch takes place and

then compare it with other types of transitions, i.e., M-M, F-F, and F-M. Industry and year fixed

19
effects are included to rule out any potential omitted industry-specific effects and year-specific

effects.

ForecastAccuracy it-1,it+2 = 0 + 1(type of transition)it + 2-6(CFO variables)it


+ 7-14(Firm variables)it-1 + it (3)

Key independent variables. Our test variables include i) M-F, which equals one when a

transition from a male to a female CFO takes place, and zero otherwise, ii) M-M, which equals

one when a transition from a male to a male CFO takes place, and zero otherwise, iii) F-F, which

equals one when a transition from a female to a female CFO takes place, and zero otherwise, and

iv) F-M, which equals one when a transition from a female to a male CFO takes place, and zero

otherwise. We include these dummy variables in isolation in each regression.

To isolate the impact of CFOs gender on analyst forecast accuracy in our analysis, we

control for other potential factors, such as education (Becker 1964) and work experience

(Ericsson and Lehmann 1996). The dummy variable MBA is used to control for CFOs

qualifications and takes a value of one if the CFO has an MBA degree, and zero otherwise. To

control for CFOs previous experience, we employ three other dummy variables(i) MGT- EXP

represents the presence or absence of top managerial experience that would require strategic

decision-making (such as chief operating officer, CEO, division manager, manager of global

operations, etc.), (ii) Was-CFO to denote whether the executive held a CFO position previously,

and (iii) CFO Age proxies for the executives years of experience. We also include a variable,

Insider, to indicate whether the CFO emerged from inside the firm.

Dependent variables. The dependent variables in Equation (3) are computed as the

changes in forecast error (FE), forecast dispersion (FD), and forecast revision (FR) from the

year prior to the CFO appointment (t-1) to two years subsequent to the appointment (t+2).

20
We again control for the relevant firm characteristics, such as such as analysts coverage,

leverage, PPE (Property, plant and equipment), EP, loss, growth opportunity, ROA, and

volatility as in Equation (1). All firm control variables are measured as of the fiscal year-end

prior to the CFO appointment. Variables are winsorized at one percent cutoff at both tails to limit

the influence of outliers. P-values are calculated using Whites heteroskedasticity-corrected

standard errors.

To represent the difference in information environment among firms, we partition our full

sample into four sub-samples: high R&D firms vs. low R&D firms and small firms vs. large

firms. Firms in the same industry (three-digit SIC code) are categorized into two groups (high

and low) based on the industry-median for the year prior to CFO hiring. Thus, high R&D firms

are those that have R&D to sales ratio above the industry-median and large firms are those that

have total assets above the industry-median.

The analysts gender and forecast accuracy

The impact of an analysts gender on his/her forecast accuracy is investigated using

Equations (4a) and (4b).

ForecastAccuracyPerAnalystit+1 = 0 + 1(Female Analyst)it + 2-8(Firm variables)it-1


+ it (4a)

ForecastBiasPerAnalystit+1 = 0 + 1(Female Analyst)it + 2-8(Firm variables)it-1


+ it (4b)

Dependent variables. The forecast accuracy of each analyst is measured along two

dimensions: forecast error analyst (FE per analyst), forecast revision analyst (FR per analyst).

We compute FE per analyst the absolute value of the difference between the median of

individual analysts forecasts made within eight months prior to a firms fiscal year-end and the

I/B/E/S actual earnings, scaled by beginning stock price (Kumar 2010; Green et al. 2009). FR

21
per analyst reflects the standard deviation of individual analyst revisions made within eight

months prior to a firms fiscal year-end, scaled by beginning stock price. Accordingly, the

forecast accuracy of each analyst increases when his/her forecast error and forecast revision

decrease. Finally, to measure the forecast bias due to analysts optimism, we use the variable FB

per analyst, which is computed as the difference between the median of individual analysts

forecasts made within eight months prior to a firms fiscal year-end and the I/B/E/S actual

earnings, scaled by beginning stock price. This measure is positive when the analysts forecasts

are upward bias and negative when the analysts forecasts are downward bias. In other words,

FB per analyst is positively related to the analysts optimism.

Control variables. We again control for relevant firm characteristics, such as analysts

coverage, leverage, PPE (Property, plant and equipment), EP, loss, growth opportunity, ROA,

and volatility as in Equations (1) and (3). All firm control variables, Firm variables, are

measured as of the fiscal year-end prior to the CFO appointment and are winsorized at one

percent cutoff at both tails to limit the influence of outliers.

IV. RESULTS

Descriptive statistics and univariate analysis

Table 1 provides descriptive statistics on CFOs and firm characteristics (Panel A) and

analyst forecasts (Panel B) of all transition groups including M-F, M-M, F-F, and F-M. Most of

the CFO appointments belong to the M-M group with 632 observations, while, as expected, there

are only a handful of observations in the F-F group (n=7). The last column represents the

differences between other categories (M-M, F-F, and F-M) and the test group (M-F). In general,

the firm characteristics are similar between M-F and other groups in terms of R&D, Leverage,

PPE, MTB, ROA, Assets, Volatility, and Analyst coverage. However, firms that replace a male

22
CFO by a female CFO tend to have higher earnings to price, lower forecast error, lower forecast

dispersion, lower forecast revision, and a younger new CFO than the others.

Table 2 gives us a univariate view of the link between the CFOs gender and analyst

forecast accuracy. In Panel A and Panel B, we compare the differences in the accuracy of analyst

forecasts between male CFO firms and female CFO firms, both before and after the appointment.

The evidence shows that, on average, analysts produce significantly more accurate forecasts in

terms of lower FE, FD, and FR, for firms with female CFOs than for those with male CFOs. The

results are in support of H1, and consistent with the notion that female CFOs tend to pursue

higher standards of reporting and disclosure, thereby reducing the information asymmetry

between firms and financial analysts.

Panel C investigates the analyst forecast accuracy in two periods, pre- and post-

appointment. We document that the accuracy of analyst forecasts is significantly higher, i.e.,

lower FE, FD, and FR, in the pre-appointment period. The result implies that the noise of CFO

replacement event as well as the information asymmetry about the new CFO renders the

analysts task of forecasting earnings more ambiguous. More on the relevance of this finding will

be discussed later.

In general, the three panels in Table 2 document that the accuracy of analyst forecasts

increases with the representation of a female CFO and decreases with a CFO replacement event.

The CFOs gender and analyst forecast accuracy

In this section we examine the effect of the CFOs gender on analyst forecast accuracy in

a multivariate framework. Table 3 represents the relationship between female CFOs and the

accuracy of analyst forecasts during the pre-appointment period, i.e., in years (t-2) and (t-1). The

evidence in Models 1, 3, and 5 suggests that Female CFO is negatively associated with analyst

23
forecast error (FE), forecast dispersion (FD), and forecast revision (FR) (p-values of 0.04, 0.02,

and 0.01, respectively). The results are consistent with those in Panel A of Table 2 and in support

of H1. The results hold when we include the industry fixed effects in Models 2, 4, and 6 to

capture the potential industry-specific omitted variables.

To the extent that female CFOs may not be randomly appointed if they self-select into

certain types of firms, we use the propensity score matching method (Behr and Heid 2011;

Faulkender and Yang 2010; Gao, Harford, and Li 2013; Iskandar-Datta and Jia 2013) to correct

for potential selection bias. In this approach, for each female CFO firm in our sample, we

identify a matched firm that is as similar to the firm hiring the female CEO with the exception

that it hired a male CFO. We first begin with a logistic regression that includes firm

characteristics such as Assets, PPE, ROA, Leverage, R&D, and MTB that explain the decision to

hire a female versus a male CFO. Second we match the male CFO firms (the control firms) with

the female CFO firms (the treatment firms) using the estimated propensity scores.3 The results

from the propensity score sample (Models 79 of Table 3) confirm our previous findings as

female CFOs still have negative and significant (except for FE) link with FE, FD, and FR (p-

values of 0.34, 0.03, and 0.04, respectively).

In Table 4, we investigate the relationship between female CFOs and the accuracy of

analyst forecasts during the post-appointment period, i.e., in years (t+1) and (t+2). Our findings

support the hypothesis that firms with female CFOs tend to experience higher analyst forecast

accuracy due to higher disclosure quality. Particularly, the coefficients on Female CFO are

significantly negative in all models of Table 4 (except for Model 9), consistent with those in

Panel B of Table 2. Overall, the results from Tables 3 and 4 are in support of H1. The results in


3
We avoid path dependence by using a matching algorithm that allows for replacement (Behr and Heid
2011; Gao et al. 2013).

24
Tables 3 and 4 hold when the pre-appointment period is defined as 3 years before the

appointment and the post-appointment period is defined as 3 years after the appointment.

CFO transition and the change in analyst forecast accuracy

Table 5 analyzes the effect of male to female CFO transitions on the change in analyst

forecast accuracy from year (t-1) to year (t+2) (Forecast Accuracyt-1,t+2). The coefficients on

M-F, though not significant, are negative in all models, consistent with our predictions that a M-

F transition improves the accuracy of analyst forecasts. To ensure that we capture the impact of a

M-F transition on the change in analyst forecast accuracy, we even control for the new CFO

education and experience in Models 2, 4, and 6. The results, however, are not surprising as we

already show in Panel C of Table 2 that the analyst forecast accuracy decreases after the

appointment. We interpret the insignificance of the results as the reduction in the accuracy of

analyst forecasts due to the noise of the CFO replacement event and the information asymmetry

about the new CFO. In other words, although the analyst forecast accuracy is higher for female

CFOs than for male CFOs in both pre- and post-appointment periods, the accuracy of analyst

forecasts is not necessarily higher for post-appointment female CFOs than for pre-appointment

male CFOs. The results thus do not support H2.

To the extent that the benefits of a female CFO arising from high-quality reporting are

dependent on the firms environmental uncertainty, we consider the firms information

environment when examining a CFO transition. Table 6a investigates the effect of a M-F

transition on the change in analyst forecast accuracy from year (t-1) to year (t+2) among firms

with high R&D investments and those with low R&D investments. These models examine the

degree to which the benefits from a transparent and high quality reporting policy depend on the

firms level of information uncertainty. Accordingly, we predict a switch from M-F would

25
increase the analyst forecast accuracy among high R&D firms. The evidence (Table 6a Panel

A) is consistent with H3 as a M-F transition significantly lowers FE (coefficient of -0.015 and

p-value of 0.05), FD (coefficient of -0.006 and p-value of 0.10), and FR (coefficient of -0.005

and p-value of 0.09). These three respective coefficients are insignificant in low R&D intensity

firms. Our findings show that replacing a male CFO by a female one enhances the analyst

forecast accuracy among firms with less transparent information environment (high R&D

intensity).

Table 7a (Panel A) strengthens these results by showing that a M-F switch also increases

the change in analyst forecast accuracy among small firms, which are typically associated with

more information opacity. We find that for small firms, the male to female CFO transition is

significantly negatively related to FE (coefficient of -0.045 and p-value of 0.10), in FD

(coefficient of -0.031 and p-value of 0.06), and FR (coefficient of -0.021 and p-value of 0.08).

These results again support our hypothesis H3.

We then test the impact of other transition categories (M-M, F-F, and F-M) on the change

in analyst forecast accuracy in both information environments (high transparency vs. low

transparency). Evidence presented in Tables 6b and 7b shows that the coefficients on M-M, F-F,

and F-M are insignificant in all regressions. Our results thus demonstrate convincingly that

replacing a male CFO by a female one is one avenue to improve the firms disclosure quality.4

Robustness check

To address the potential self-selection concern in which female CFOs may not be

randomly assigned to firms, we use Heckmans (1979) two-stage model as a robustness check


4
The results in Tables 6a, 6b, 7a, and 7b hold when we do not include the CFO variables.

26
(Francis et al. 2013).5 The first stage is a probit regression examining the likelihood of replacing

a male CFO by a female CFO. Particularly, we control for the firm characteristics such as Assets,

PPE, ROA, Leverage, Volatility, industry and year fixed effects. In the second stage, we estimate

an OLS regression as described in Equation (1) and include the Inverse Mills Ratio obtained

from the first stage. This approach aims to control for the endogeneity of a M-F transition by

ensuring that the unobservables in the first stage and those in the second stage are unrelated

i.e., the inclusion of Inverse Mills Ratio will not significantly affect the result of the regression.

The results, presented in Panel B of Tables 6a and 7a, reaffirm our findings in the OLS

regressions (Panel A of Tables 6a and 7a), i.e., the M-F transition has a positive link with analyst

forecast accuracy among firms with high R&D and small firms as the coefficients on M-F are

negative and significant in all models, i.e., FE, FD, and FR, even after including the Inverse

Mills Ratio (whose coefficient is mostly statistically insignificant).

The analysts gender and forecast accuracy

The univariate analysis in Panel C of Table 2 shows that the accuracy of analyst forecasts

tends to diminish in the aftermath of a CFO appointment. We interpret this to imply that the

analysts have high uncertainty about the new CFOs style of disclosure and believe that

magnitude of the accuracy impairment will depend on the analysts gender. Table 8 displays our

results of the impact of an analysts gender on forecast accuracy in the year following the

appointment.

Models 1 4 show that female analysts provide more accurate earnings forecasts than

their male counterparts, exhibited by significantly smaller forecast error (p-values of 0.05 and

0.07) and lower standard deviations (each with a p-value of 0.03). The results support the


5
According to Bascle (2008), the self-selection bias is best addressed by using Heckman 2-stage model.

27
overconfidence (H4a) and self-selection (H4a) hypotheses, consequently rejecting the network

hypothesis (H4c).

Our prior results suggest that better analyst forecast accuracy of firms with female CFOs

may be attributed to improvement in the firms level of transparency. Models 2 and 4 strengthen

that finding by demonstrating that female CFOs do not only increase the average accuracy of

analysts forecasts but also enhance the forecast accuracy of each analyst, namely, significantly

smaller FE per analyst (coefficient of -0.049 and p-value of 0.04) and lower FR per analyst

(coefficient of -0.011 and p-value of 0.18).

We then examine the analysts forecast bias to separate the two hypotheses,

overconfidence and self-selection. The coefficients on Female Analyst are significantly negative

in Models 5 and 6 (p-values of 0.02 and 0.04, respectively), indicating that female analysts

forecasts are more accurate and also relatively less optimistic than male analysts. Our findings

are in support of the overconfidence hypothesis (H4a) rather than the self-selection hypothesis

(H4b).

To test H5, we divide the sample into two groups: firms hiring female CFOs and firms

hiring male CFOs. Evidence from Models 710 is consistent with our hypotheses as female

analysts forecasts accuracy are not different from those of their male counterparts (Models 78)

in female CFO firms but female analysts forecasts are significantly more accurate than those of

male analysts in male CFO firms (Models 910). In sum, our findings suggest that female

analysts, with their lower degree of overconfidence, produce more accurate forecasts than their

male counterparts. Further, the differences in forecast accuracy due to the analysts gender are

more pronounced among firms with less transparent reporting and disclosure, consistent with

H5.

28
V. CONCLUSIONS

The first part of this study investigates the impact of a C-Suite members gender, or more

specifically, the CFO, on the accuracy of analyst forecasts by hand-collecting and analyzing data

for a large cross-section of newly appointed CFOs over the period 14 years. The hypothesis is

based on the notion that female CFOs, who are more risk-averse, less overconfident, and have

higher ethical standards are likely to be more conservative, less aggressive, and more ethical in

their reporting practices than male CFOs. We employ a two-pronged approach: (i) examines the

impact of the CFOs gender on the accuracy of analyst forecast and (ii) examines the impact of a

M-F transition on the change in analyst forecast accuracy from the year prior to the CFO

appointment (t-1) to two years subsequent to the appointment (t+2) and. The evidence shows that

female CFOs are associated with higher analyst forecast accuracy both before and after the

appointment. For firms with high information asymmetry, replacing a male by a female CFO

leads to a relative improvement in the accuracy of analyst forecasts compared to other types of

transitions. Overall, our findings support the view that female executives, with their high

disclosure quality, tend to improve the firms level of transparency, exhibited by the

improvement in the accuracy of analyst forecasts.

The second part of this study examines the impact of an analysts gender on his/her

forecast accuracy after the CFO replacement event, which can slightly take the analysts by

surprise. We document that, on average, female analysts produce more accurate forecasts than

their male counterparts, consistent with Kumars (2010) findings. However, our results are

consistent with the overconfidence hypothesis, and not the self-selection hypothesis, suggesting

that female analysts are less overconfident than their male counterparts. More importantly, the

impact of of gender-based differences on analysts forecast accuracy is pronounced only among

29
firms hiring male CFOs. This result can be attributed to the fact that because new female CFOs

tend to provide more informative and credible reports than their male counterparts making it

easier for analysts (both male and female) to forecasts, thereby weakening the advantage of

female analysts over their male counterparts due to risk-aversion, less overconfidence, and/or

superior skills.

This study makes several important contributions. First, it extends the literatures on

reporting quality and analyst forecasts by showing that gender of a C-Suite member affects

analyst forecasts. Second, it fills the gap in the gender and upper echelon literatures by showing

that female CFOs, by increasing the level of transparency, indeed help improve the accuracy of

analyst forecasts, complementing Francis et al (2015), Liu et al. (2014), Peni and Vhmaa

(2010), Huang and Kisgen (2013), and Doan and Iskandar-Dattas (2016) research. Third, it

contributes to the literature on the impact of an analysts gender on his/her forecast accuracy.

Finally, our work gives support to the gender-based behavioral differences positing that women

are more risk-averse, less overconfident, and have greater ethical sensitivities than men.

30
Appendix: Variable Definitions

Variable Definition
CFO characteristics variables
Female CFO Equals one if the new CFO is female, and zero otherwise
M-F Equals one if the CFO appointment is a transition from a male to a female
executive, and zero otherwise
M-M Equals one if the CFO appointment is a transition from a male to a male
executive, and zero otherwise
F-M Equals one if the CFO appointment is a transition from a female to a male
executive, and zero otherwise
F-F Equals one if the CFO appointment is a transition from a female to a
female executive, and zero otherwise
Female Analyst Equals one if the analyst is female, and zero otherwise
Insider Equals one if the new CFO is an insider, and zero otherwise
MBA Equals one if the new CFO has an MBA, and zero otherwise
Was-CFO Equals one if the new CFO held a CFO position previously, and zero
otherwise
MGT-EXP Equals one if the new CFO has management experience, and zero
otherwise
CFO Age The age of the new CFO
Firm characteristics variables
Assets The natural logarithm of total assets (item #6)
MTB Total Assets (item #6) less common equity (item #6) less deferred taxes
balance sheet (item #74) plus market value of equity (item #199 * #25)
divided by total assets (item #6)
ROA [Operating Income after depreciation (item #178) divided by total assets
(item #6)] * 100
Volatility Idiosyncratic risk, measured as the sum of the squared residual from the
Fama-Frenchs (1993) three-factor model
Leverage [Total long-term debt (item #9 + #44) divided by total assets (item #6)] *
100
R&D [Research and development expense (item #46) divided by net sales (item
#12)] * 100
PPE The proportion of property, plant and equipment (item #8) to total assets
(item #6)
EP The earnings-to-price ratio
Loss Equals one if EP is negative, and zero otherwise
Analyst Coverage The number of I/B/E/S analysts that report estimates for a firm
Dependent variables
Forecast Error (FE) The absolute value of I/B/E/S actual earnings minus the median of analyst
forecasts made within eight months prior to a firms fiscal year-end, scaled
by beginning stock price.

Forecast Dispersion The standard deviation of analysts forecasts made within eight months
(FD) prior to a firms fiscal year-end, scaled by beginning stock price

31
Forecast Revision The mean of the standard deviation of individual analyst forecasts made
(FR) within eight months prior to a firms fiscal year-end, scaled by beginning
stock price
FE Calculated as FEt+2 FEt-1
FD Calculated as FDt+2 FDt-1
FR Calculated as FRt+2 FRt-1
FE per analyst The absolute value of the difference between the median of individual
analysts forecasts made within eight months prior to a firms fiscal year-
end and the I/B/E/S actual earnings, scaled by beginning stock price
FR per analyst The standard deviation of individual analyst forecasts made within eight
months prior to a firms fiscal year-end, scaled by beginning stock price
FB per analyst The difference between the median of individual analysts forecasts made
within eight months prior to a firms fiscal year-end and the I/B/E/S actual
earnings, scaled by beginning stock price
Other variables
CEO Tenure The number of years the CEO has been in the position
TMT Gender Equals one if there is at least one female member in the TMT (excluding
Diversity the CFO), and zero otherwise

32
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37
Table 1: Descriptive statistics

This table summarizes Pearson correlations of some salient focus-relevant characteristics of our sample. Year t is the year of appointment.
Firm and forecast variables are winsorized at the 1% level on both tails. See Appendix for variable definitions.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Male-to-Female Male-to-Male CFOs Female-to-Female Female-to-Male Test of Difference


CFOs (N = 59) (N = 632) CFOs (N = 7) CFOs (N = 23) (Between all other
(M-F) (M-M) (F-F) (F-M) types of transitions
and M-F )
Mean / Mean / Mean / Mean / t-statistics
Median Median Median Median
Frequency Frequency Frequency Frequency
Panel A
1. Insidert 52.54% N/A 46.68% N/A 28.57% N/A 47.83% N/A -6.02%
2. MBAt 47.46% N/A 48.73% N/A 42.86% N/A 69.57% N/A 1.94%
3. Was-CFOt 52.24% N/A 58.07% N/A 28.57% N/A 73.91% N/A 4.07%
4. MGT-EXPt 13.56% N/A 16.14% N/A 28.57% N/A 30.43% N/A 3.21%
5. CFO Aget 44.10 44.00 45.80 46.00 44.29 45.00 48.57 48.00 1.78a
6. R&D 5.24 0.64 5.00 0.00 2.18 0.00 14.08 11.45 4.53%
7. Leveraget-1 15.92 13.49 19.07 16.85 10.66 0.38 15.60 16.88 2.94
8. PPEt-1 24.50 18.41 28.89 22.33 24.74 19.35 20.31 16.05 4.05
9. EPt-1 2.88% 4.50% -0.54% 4.11% 4.50% 4.45% 2.18% 3.49% -3.27%b
10. Losst-1 15.25% 0.00% 17.88% 0.00% 0.00% 0.00% 21.74% 0.00% 2.57%
11. MTBt-1 1.95 1.59 2.16 1.60 2.57 1.90 2.52 2.08 0.22
12. ROAt-1 9.86 9.23 9.11 8.68 12.24 10.88 5.45 6.52 -0.84
13. Assets 7.39 7.28 7.37 7.28 6.46 7.27 7.66 7.80 -2.14%
14. Volatilityt-1 0.37 0.31 0.34 0.29 0.33 0.18 0.36 0.29 -0.03
15. Analyst Coveraget-1 13.42 11.00 12.68 11.00 7.14 7.00 15.26 10.00 -0.71
Panel B
16. FEt+1 1.98% 1.08% 10.26% 1.41% 2.30% 2.36% 7.35% 2.27% 8.09%c
17. FEt+2 3.82% 1.61% 5.49% 1.93% 1.37% 1.84% 3.69% 2.24% 1.57%
18. FDt+1 1.75% 1.60% 5.55% 1.63% 1.68% 1.25% 2.19% 1.83% 3.64%
19. FDt+2 2.29% 1.87% 3.89% 1.82% 1.47% 1.53% 2.67% 1.86% 1.53%b
20. FRt+1 1.45% 1.25% 4.09% 1.30% 1.56% 1.15% 1.60% 1.53% 2.53%c
21. FRt+2 1.86% 1.42% 3.82% 1.41% 1.42% 1.29% 2.22% 1.31% 1.88%b
22. FE 2.04% 0.41% 1.25% 0.48% 0.45% 0.73% 1.75% 0.36% -0.78%
23. FD 0.71% 0.37% 0.82% 0.27% 0.00% 0.28% 1.06% 0.13% 0.11%
24. FR 0.42% 0.22% 1.17% 0.22% 0.13% 0.31% 0.98% 0.18% 0.73%

38
Table 2: Univariate analysis of CFO gender and analyst forecast accuracy
This table reports the univariate analysis of analyst forecast accuracy for firms by CFO
gender in two periods, pre-and post-appointment periods.

Panel A Pre-appointment (t-2) and (t-1): Male CFOs vs. Female CFOs
Measures of accuracy Male CFOs Female CFOs Test of Difference
N Mean N Mean (t-statistics)
FE 1,316 2.66% 60 1.75% 0.90%a
FD 1,286 2.20% 59 1.52% 0.68%a
FR 1,304 1.85% 60 1.20% 0.65%a

Panel B Post-appointment (t+1) and (t+2): Male CFOs vs. Female CFOs
Measures of accuracy Male CFOs Female CFOs Test of Difference
N Mean N Mean (t-statistics)
FE 1,288 4.06% 130 2.37% 1.19%a
FD 1,287 2.73% 127 1.84% 0.89%a
FR 1,297 2.21% 130 1.54% 0.67%a

Panel C Pre-appointment (t-2) and (t-1) vs. Post-appointment (t+1) and (t+2)
Measures of accuracy Pre Post Test of Difference
N Mean N Mean (t-statistics)
FE 1,376 2.62% 1,418 3.91% -0.13%a
FD 1,345 2.17% 1,414 2.65% -0.48%a
FR 1,364 1.83% 1,427 2.15% -0.32%b

39
Table 3: Multivariate analysis of CFO gender and forecast accuracy preceding CFO transition
This table examines the impact of female CFOs on analyst forecast accuracy as in Equation (1).
ForecastAccuracyit = 0 + 1(Female CFO)it + 2-9(Firm variables)it-1 + it
The sample includes all firm-years within 2 years before the appointment. The dependent variables are FEt, FDt, and FRt.
Dependent and firm variables are winsorized at the 1% level on both tails. See Appendix for the definition of variables.
Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Full sample Propensity score sample


FE FE FD FD FR FR FE FD FR
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Female CFOt -0.008b -0.008c -0.005b -0.004c -0.005a -0.004b -0.004 -0.004b -0.004b
(0.04) (0.08) (0.02) (0.10) (0.01) (0.05) (0.34) (0.03) (0.04)
Firm variables
Analyst Coveraget-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.90) (0.86) (0.60) (0.47) (0.54) (0.44) (0.67) (0.08) (0.21)
Leveraget-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.06) (0.03) (0.11) (0.05) (0.11) (0.05) (0.76) (0.37) (0.06)
PPEt-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.11) (0.11) (0.36) (0.05) (0.53) (0.05) (0.16) (0.31) (1.00)
EPt-1 -0.228a -0.228a -0.162a -0.164a -0.138a -0.138a -0.029 0.004 0.031b
(0.00) (0.00) (<.0001) (<.0001) (<.0001) (<.0001) (0.60) (0.86) (0.02)
Losst-1 -0.030a -0.027b -0.022a -0.019a -0.018a -0.016a 0.000 0.004 0.008b
(0.01) (0.03) (0.00) (0.00) (0.00) (0.00) (1.00) (0.25) (0.02)
MTBt-1 -0.003a -0.003a -0.002a -0.002a -0.002a -0.002a -0.003b -0.002a -0.002a
(0.01) (0.01) (0.0) (0.01) (0.00) (0.01) (0.02) (<.0001) (<.0001)
ROAt-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.38) (0.70) (0.49) (0.89) (0.63) (0.95) (0.78) (0.23) (0.08)
Volatilityt-1 0.090a 0.094a 0.030a 0.039a 0.028a 0.035a 0.011 0.014c 0.013c
(0.00) (0.00) (0.01) (0.00) (0.01) (0.00) (0.63) (0.10) (0.09)
Intercept 0.015 0.009 0.016a 0.002 0.012b 0.000 0.033a 0.005 0.002
(0.35) (0.64) (0.01) (0.83) (0.02) (1.00) (0.01) (0.21) (0.58)
Industry fixed effects No Yes No Yes No Yes Yes Yes Yes
Year fixed effects Yes Yes Yes Yes Yes Yes Yes Yes Yes
R-square 0.374 0.393 0.397 0.429 0.393 0.423 0.405 0.573 0.511
Adjusted R-square 0.362 0.373 0.386 0.410 0.382 0.404 0.142 0.379 0.295
N 1,257 1,257 1,242 1,242 1,253 1,253 102 100 102

40
Table 4: Multivariate analysis of CFO gender and forecast accuracy following CFO transition
This table examines the impact of female CFOs on analyst forecast accuracy as in Equation (1)
ForecastAccuracyit = 0 + 1(Female CFO)it + 2-9(Firm variables)it-1 + it
The sample includes all firm-years within 2 years after the appointment. The dependent variables are FEt, FDt, and FRt.
Dependent and firm variables are winsorized at the 1% level on both tails. See Appendix for the definition of variables.
Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Full sample Propensity score sample


FE FE FD FD FR FR FE FD FR
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Female CFOt -0.012a -0.010b -0.006a -0.003c -0.004a -0.002c -0.009a -0.003c -0.002
(0.01) (0.03) (0.00) (0.07) (0.01) (0.06) (0.01) (0.09) (0.16)
Firm variables
Analyst Coveraget-1 -0.001 -0.001c 0.000 0.000 0.000 0.000 -0.001a 0.000 0.000
(0.15) (0.09) (0.92) (0.87) (0.85) (0.92) (0.00) (0.81) (0.69)
Leveraget-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.65) (0.69) (0.04) (0.03) (0.05) (0.04) (0.90) (0.03) (0.20)
PPEt-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.21) (0.10) (0.20) (0.27) (0.44) (0.67) (0.03) (0.16) (0.60)
EPt-1 -0.373a -0.373a -0.120a -0.120a -0.079a -0.080a -0.088a -0.026c -0.026c
(0.00) (0.00) (<.0001) (<.0001) (<.0001) (<.0001) (0.00) (0.08) (0.09)
Losst-1 -0.031c -0.027 -0.011c -0.007 -0.007c -0.005 -0.005 0.000 -0.002
(0.07) (0.13) (0.07) (0.21) (0.06) (0.18) (0.35) (0.98) (0.52)
MTBt-1 -0.010a -0.009a -0.005a -0.004a -0.003a -0.003a -0.003 -0.002a -0.001b
(0.00) (0.00) (<.0001) (<.0001) (<.0001) (<.0001) (0.11) (0.01) (0.03)
ROAt-1 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.24) (0.19) (0.75) (0.32) (0.61) (0.84) (0.39) (0.30) (0.48)
Volatilityt-1 0.044 0.053 0.035a 0.043a 0.027a 0.032a 0.012 0.012b 0.009c
(0.25) (0.18) (0.00) (0.00) (0.00) (0.00) (0.28) (0.03) (0.08)
Intercept 0.067b 0.060c 0.027a 0.022a 0.021a 0.016a 0.038a 0.019a 0.017a
(0.02) (0.06) (<.0001) (0.00) (<.0001) (0.00 (<.0001) (<.0001) (<.0001)
Industry fixed effects No Yes No Yes No Yes Yes Yes Yes
Year fixed effects Yes Yes Yes Yes Yes Yes Yes Yes Yes
R-square 0.408 0.413 0.454 0.483 0.403 0.425 0.266 0.331 0.307
Adjusted R-square 0.398 0.396 0.446 0.468 0.394 0.409 0.144 0.218 0.191
N 1,362 1,362 1,358 1,358 1,371 1,371 232 230 236

41
Table 5: CFO transition and change in analyst forecast accuracy
This table examines the impact of CFO transition on change in analyst forecast accuracy
(Equation (3)).
ForecastAccuracyit-1,it+2 = 0 + 1(type of transition)it + 2-6 (CFO variables)it
+ 7-14(Firm variables)it-1 + it
The dependent variables include FE, FD, and FR during two periods, from year (t-1) to year
(t+2) and from year (t-2) to year (t+2). Year t is the year of appointment. Dependent and firm
variables are winsorized at the 1% level on both tails. Industry and year fixed effects are
included in all models. See Appendix for the definition of variables. Numbers in parentheses are
P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Forecast Accuracyt-1,t+2
Test variables FE FE FD FD FR FR
(1) (2) (3) (4) (5) (6)
M-F -0.012 -0.011 -0.007 -0.006 -0.004 -0.003
(0.49) (0.52) (0.36) (0.42) (0.54) (0.71)
CFO variables
Insidert -0.035 0.005 -0.011
(0.29) (0.59) (0.39)
MBAt 0.014 0.008 0.012
(0.58) (0.52) (0.30)
Was-CFOt 0.011 0.016 0.007
(0.61) (0.29) (0.58)
MGT-EXPt -0.001 0.013 0.009
(0.96) (0.26) (0.33)
CFO aget -0.001 0.000 0.000
(0.29) (0.52) (0.38)
Firm variables
Analyst Coveraget-1 0.000 0.001 0.000 0.000 0.001c 0.001
(0.67) (0.52) (0.21) (0.43) (0.10) (0.12)
Leveraget-1 -0.001 -0.001 0.000 0.000 -0.001 -0.001
(0.51) (0.45) (0.60) (0.60) (0.26) (0.25)
PPEt-1 -0.001c -0.001c -0.001 -0.001 0.000 0.000
(0.07) (0.08) (0.13) (0.14) (0.20) (0.21)
EPt -1 -0.048 -0.052 -0.029 -0.029 -0.022 -0.020
(0.69) (0.67) (0.33) (0.32) (0.48) (0.51)
Losst-1 0.011 0.005 -0.008 -0.011 0.003 -0.001
(0.66) (0.85) (0.30) (0.16) (0.76) (0.90)
MTBt-1 -0.018 -0.019 -0.002c -0.002c -0.010 -0.009
(0.17) (0.16) (0.07) (0.10) (0.19) (0.21)
ROAt-1 0.004 0.004 0.000 0.000 0.002 0.002
(0.24) (0.25) (0.33) (0.36) (0.22) (0.22)
Volatilityt-1 -0.118 -0.129 -0.058 -0.059 -0.060 -0.063
(0.21) (0.17) (0.45) (0.40) (0.31) (0.25)
Intercept 0.050 0.106 0.043 0.041 0.028 0.043c
(0.44) (0.21) (0.34) (0.19) (0.41) (0.09)
R-square 0.108 0.112 0.066 0.074 0.160 0.166
Adjusted R-square 0.053 0.029 0.002 0.034 0.102 0.027
N 695 695 634 634 630 630

42
Table 6a: Male-to-female transition and change in forecast accuracy by R&D intensity
This table reports results from the OLS and Heckman two-stage regressions explaining the impact of M-F transition on change in forecast
accuracy (from year t-1 to t+2) for high and low R&D firms (Equation (3)).
ForecastAccuracyit-1,it+2 = 0 + 1(type of transition)it + 2-6 (CFO variables)it + 7-14(Firm variables)it-1 + it
The first stage of the Heckman model is a probit regression examining the likelihood of replacing a male CFO by a female CFO, controlling for
the firm characteristics such as Assets, PPE, ROA, Leverage, Volatility, industry and year fixed effects. The dependent variables are FE,
FD, and FR. Year t is the year of appointment. Dependent and firm variables are winsorized at the 1% level on both tails. Industry and year
fixed effects are included in all models. High R&D firms are those that have R&D to sales ratio lie above the industry-median. See Appendix
for the definition of variables. Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Panel A: OLS Regressions Panel B: Heckman Two-Stage Models (Stage 2)


High R&D firms Low R&D firms High R&D firms Low R&D firms
Test variables FE FD FR FE FD FR FE FD FR FE FD FR
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
M-F -0.015b -0.006c -0.005c 0.006 -0.014 -0.001 -0.016b -0.007c -0.005c 0.006 -0.014 -0.005
(0.05) (0.10) (0.09) (0.88) (0.31) (0.94) (0.04) (0.09) (0.10) (0.88) (0.30) (0.76)
Inverse Mill Ratio 0.260 0.108 0.009 -0.037 0.014 0.389
(0.12) (0.17) (0.85) (0.96) (0.92) (0.36)
CFO variables
Insidert 0.012 0.007 0.001 -0.120 0.004 -0.040 0.005 0.004 0.001 -0.119 0.003 -0.050
(0.16) (0.13) (0.69) (0.11) (0.81) (0.19) (0.50) (0.27) (0.74) (0.15) (0.85) (0.20)
MBAt 0.009 0.002 0.002 -0.008 0.016 0.012 0.009 0.002 0.002 -0.008 0.016 0.014
(0.19) (0.45) (0.34) (0.87) (0.45) (0.55) (0.19) (0.45) (0.33) (0.87) (0.45) (0.50)
Was-CFOt 0.007 0.000 0.000 -0.038 0.027 -0.009 0.007 0.000 0.000 -0.038 0.028 -0.008
(0.19) (0.96) (0.86) (0.47) (0.27) (0.75) (0.16) (0.95) (0.86) (0.47) (0.27) (0.76)
MGT-EXPt 0.001 -0.001 -0.002 -0.027 0.022 0.008 0.001 -0.001 -0.002 -0.027 0.022 0.009
(0.89) (0.79) (0.32) (0.60) (0.29) (0.68) (0.89) (0.75) (0.33) (0.60) (0.29) (0.66)
CFO aget 0.000 0.000 0.000b -0.002 0.000 0.000 0.000 0.000 0.000b -0.002 0.000 0.000
(0.94) (0.96) (0.05) (0.33) (0.69) (0.73) (0.96) (0.94) (0.05) (0.35) (0.69) (0.68)
Firm variables
Analyst Coveraget-1 0.000 0.000 0.000 0.002 0.000 0.002 0.000 0.000 0.000c 0.002 0.000 0.001
(0.89) (0.57) (0.15) (0.57) (0.60) (0.21) (0.66) (0.79) (0.09) (0.46) (0.60) (0.22)
Leveraget-1 0.001 0.000 0.000 -0.003 -0.001 -0.001 0.001 0.000 0.000 -0.003c -0.001 -0.001
(0.37) (0.36) (0.33) (0.14) (0.48) (0.16) (0.26) (0.68) (0.38) (0.10) (0.50) (0.20)
PPEt-1 0.000 0.000 0.000 -0.001 -0.001 0.000 0.000 0.000 0.000 -0.001 -0.001 0.000
(0.97) (0.57) (0.79) (0.68) (0.15) (0.52) (0.26) (0.41) (0.72) (0.69) (0.18) (0.96)
EPt-1 -0.101 -0.047 0.005 -0.025 0.002 -0.078 -0.103 -0.048 0.004 -0.025 0.002 -0.075
(0.35) (0.17) (0.41) (0.86) (0.98) (0.32) (0.34) (0.16) (0.39) (0.86) (0.98) (0.32)
Losst-1 0.014 -0.006 -0.001 0.084 -0.007 0.025 0.014 -0.006 -0.001 0.084 -0.007 0.021
(0.56) (0.30) (0.87) (0.15) (0.69) (0.33) (0.54) (0.31) (0.88) (0.16) (0.69) (0.42)
MTBt-1 -0.004c -0.001c 0.000 -0.092c -0.015c -0.045c -0.001 0.000 0.000 -0.093b -0.014 -0.040c
(0.08) (0.09) (0.67) (0.07) (0.09) (0.08) (0.55) (0.83) (0.78) (0.03) (0.11) (0.06)
ROAt-1 0.001 0.000 0.000 0.019c 0.003 0.009c 0.001 0.000 0.000 0.019c 0.003 0.009c
(0.11) (0.37) (0.26) (0.09) (0.17) (0.09) (0.16) (0.65) (0.29) (0.07) (0.18) (0.08)
Volatilityt-1 0.081 0.012 0.004 -0.358b -0.120 -0.150 0.102c 0.021 0.005 -0.360c -0.119 -0.126
(0.18) (0.30) (0.67) (0.04) (0.32) (0.14) (0.10) (0.19) (0.69) (0.06) (0.34) (0.24)
Intercept -0.044 -0.009 0.012 0.161 0.036 0.034 -0.116 -0.038 0.009 0.162 0.036 0.026
(0.43) (0.63) (0.15) (0.26) (0.46) (0.48) (0.12) (0.23) (0.57) (0.27) (0.46) (0.58)
R-square 0.172 0.295 0.151 0.214 0.154 0.283 0.176 0.301 0.151 0.214 0.154 0.286
Adjusted R-square 0.057 0.188 0.021 0.100 0.023 0.171 0.058 0.192 0.018 0.097 0.020 0.171
N 353 312 311 342 322 319 353 312 311 342 322 319

43
Table 6b: Non-male-to-female CFO transition and change in forecast accuracy by R&D intensity
This table reports results from the OLS regressions explaining the impact of non-M-F transition on change in forecast
accuracy (from year t-1 to t+2) for high and low R&D firms (Equation (3)).
ForecastAccuracyit-1,it+2 = 0 + 1(type of transition)it + + 2-6 (CFO variables)it + 7-14(Firm variables)it-1 + it
The dependent variables include FE, FD, and FR. Year t is the year of appointment. CFO characteristics and firm
variables are the same as in Table 3a. Dependent and firm variables are winsorized at the 1% level on both tails. CFO and
firm variables are in included in all models as in Table 6a. Industry and year fixed effects are also included. High R&D
firms are those that have R&D to sales ratio lie above the industry-median. See Appendix for the definition of variables.
Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Panel A: High R&D firms


Test variables FE FD FR
M-M 0.007 0.002 0.001
(0.40) (0.67) (0.87)
F-M 0.007 0.004 0.007
(0.69) (0.71) (0.50)
F-F 0.011 -0.003 -0.006
(0.39) (0.61) (0.12)
R-square 0.171 0.170 0.170 0.293 0.294 0.292 0.144 0.152 0.144
Adjusted R-square 0.055 0.055 0.055 0.185 0.186 0.185 0.013 0.023 0.013
N 353 353 353 312 312 312 311 311 311

Panel B: Low R&D firms


Test variables FE FD FR
M-M -0.004 0.014 -0.002
(0.91) (0.26) (0.90)
F-M 0.067 -0.008 0.061
(0.46) (0.62) (0.25)
F-F -0.057 -0.013 -0.022
(0.46) (0.66) (0.52)
R-square 0.214 0.214 0.214 0.154 0.154 0.154 0.283 0.284 0.283
Adjusted R-square 0.100 0.100 0.100 0.024 0.023 0.023 0.171 0.172 0.171
N 342 342 342 322 322 322 319 319 319

44
Table 7a: Male-to-female CFO transition and change in forecast accuracy by firm size
This table reports results from the OLS and Heckman two-stage regressions explaining the impact of M-F transition on change in forecast
accuracy (from year t-1 to t+2) for small and large firms (Equation (3)).
ForecastAccuracyit-1,it+2 = 0 + 1(type of transition)it + + 2-6 (CFO variables)it + 7-14(Firm variables)it-1 + it
The first stage of the Heckman model is a probit regression examining the likelihood of replacing a male CFO by a female CFO, controlling for
the firm characteristics such as Assets, PPE, ROA, Leverage, Volatility, industry and year fixed effects. The dependent variables are FE,
FD, and FR. Year t is the year of appointment. Dependent and firm variables are winsorized at the 1% level on both tails. Industry and year
fixed effects are included in all models. Large firms are those that have total assets lie above the industry-median. See Appendix for the
definition of variables. Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Panel A: OLS Regressions Panel B: Heckman Two-Stage Models (Stage 2)


Small firms Large firms Small firms Large firms
Test variables FE FD FR FE FD FR FE FD FR FE FD FR
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
M-F -0.045c -0.031c -0.021c 0.004 -0.003 0.001 -0.047c -0.033c -0.023c 0.005 -0.003 0.001
(0.10) (0.06) (0.08) (0.88) (0.73) (0.94) (0.10) (0.06) (0.07) (0.84) (0.73) (0.90)
Inverse Mill Ratio 0.586 0.729c 0.634 -0.142 -0.020 -0.035
(0.48) (0.09) (0.15) (0.68) (0.91) (0.84)
CFO variables
Insidert -0.109c -0.038 -0.041c 0.034 0.027 0.017 -0.124c -0.057c -0.057c 0.038 0.027 0.018
(0.06) (0.11) (0.09) (0.25) (0.23) (0.31) (0.07) (0.09) (0.09) (0.29) (0.28) (0.36)
MBAt -0.030 0.008 -0.003 0.023 0.020 0.014 -0.030 0.009 -0.004 0.022 0.020 0.014
(0.55) (0.63) (0.84) (0.24) (0.18) (0.21) (0.54) (0.61) (0.83) (0.24) (0.18) (0.20)
Was-CFOt -0.050 -0.022 -0.028 0.052 0.033 0.028 -0.050 -0.022 -0.030 0.051 0.033 0.028
(0.18) (0.19) (0.11) (0.14) (0.27) (0.24) (0.19) (0.19) (0.11) (0.13) (0.26) (0.24)
MGT-EXPt 0.001 0.037 0.023 0.000 0.006 0.001 0.001 0.037 0.023 0.000 0.006 0.001
(0.99) (0.15) (0.23) (0.99) (0.62) (0.95) (0.99) (0.15) (0.22) (0.99) (0.62) (0.95)
CFO aget -0.001 -0.002 -0.001 -0.001 0.001 0.001 -0.001 -0.002 -0.001 -0.001 0.001 0.001
(0.58) (0.15) (0.43) (0.68) (0.45) (0.51) (0.59) (0.15) (0.43) (0.72) (0.47) (0.52)
Firm variables
Analyst Coveraget-1 0.003 0.002c 0.002c 0.001 0.000 0.000 0.002 0.001 0.001c 0.001 0.000 0.001
(0.24) (0.08) (0.06) (0.33) (0.77) (0.18) (0.24) (0.11) (0.08) (0.26) (0.74) (0.14)
Leveraget-1 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 0.000 0.000 0.000 -0.001 -0.001 -0.001
(0.64) (0.45) (0.46) (0.41) (0.32) (0.34) (0.75) (0.70) (0.65) (0.42) (0.35) (0.37)
PPEt-1 0.000 0.000 0.000 -0.002c -0.001 -0.001 0.001 0.000 0.001 -0.002 -0.001 -0.001
(0.77) (0.27) (0.98) (0.10) (0.22) (0.29) (0.33) (0.50) (0.21) (0.14) (0.28) (0.35)
EPt-1 0.055 -0.040 -0.053 -0.181 -0.063 0.016 0.056 -0.038 -0.053 -0.180 -0.062 0.017
(0.47) (0.35) (0.25) (0.13) (0.21) (0.47) (0.47) (0.36) (0.25) (0.13) (0.20) (0.45)
Losst-1 0.108a 0.019 0.024 -0.053c -0.023 -0.009 0.109a 0.020 0.025 -0.052c -0.023 -0.008
(0.01) (0.33) (0.20) (0.06) (0.11) (0.42) (0.01) (0.32) (0.18) (0.07) (0.11) (0.43)
MTBt-1 -0.028c -0.013 -0.015 -0.012b -0.004 -0.002 -0.022c -0.005 -0.009 -0.013b -0.004 -0.002
(0.10) (0.12) (0.14) (0.02) (0.13) (0.39) (0.06) (0.31) (0.20) (0.05) (0.27) (0.53)
ROAt-1 0.006 0.003 0.004 0.001 0.000 0.000 0.005 0.003 0.003 0.002 0.000 0.000
(0.21) (0.14) (0.16) (0.21) (0.65) (0.52) (0.19) (0.16) (0.16) (0.21) (0.66) (0.57)
Volatilityt-1 -0.165 -0.045 -0.060 -0.205 -0.126 -0.092 -0.131 -0.002 -0.024 -0.215 -0.127 -0.094
(0.21) (0.43) (0.26) (0.25) (0.37) (0.39) (0.34) (0.97) (0.60) (0.27) (0.39) (0.41)
Intercept 0.112 0.058 0.043 0.134c 0.008 0.004 0.076 0.016 0.008 0.172 0.013 0.013
(0.54) (0.28) (0.37) (0.08) (0.84) (0.90) (0.68) (0.71) (0.83) (0.12) (0.83) (0.81)
R-square 0.185 0.263 0.272 0.175 0.134 0.137 0.186 0.271 0.278 0.176 0.134 0.137
Adjusted R-square 0.078 0.146 0.157 0.036 0.014 0.014 0.077 0.152 0.162 0.033 0.017 0.018
N 389 330 333 306 304 297 389 330 333 306 304 297

45
Table 7b: Non-male-to-female CFO transition and change in forecast accuracy by firm size
This table reports results from the OLS regressions explaining the impact of non-M-F transition on change in forecast accuracy
(from year t-1 to t+2) for small and large firms (Equation (3)).
ForecastAccuracyit-1,it+2 = 0 + 1(type of transition)it + + 2-6 (CFO variables)it + 7-14(Firm variables)it-1 + it
The dependent variables include FE, FD, and FR. Year t is the year of appointment. CFO characteristics and firm variables are
the same as in Table 4a. Dependent and firm variables are winsorized at the 1% level on both tails. CFO and firm variables are in
included in all models as in Table 7a. Industry and year fixed effects are also included. Large firms are those that have total assets
lie above the industry-median. See Appendix for the definition of variables. Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Panel A: Small firms


Test variables FE FD FR
M-M 0.011 0.001 -0.001
(0.79) (0.96) (0.94)
F-M -0.003 0.023 0.026
(0.97) (0.59) (0.52)
F-F 0.137 0.084 0.062
(0.49) (0.44) (0.48)
R-square 0.185 0.184 0.186 0.261 0.261 0.264 0.270 0.271 0.273
Adjusted R-square 0.078 0.077 0.079 0.144 0.144 0.148 0.156 0.157 0.159
N 389 389 389 330 330 330 333 333 333

Panel B: Large firms


Test variables FE FD FR
M-M -0.010 -0.004 -0.006
(0.59) (0.67) (0.40)
F-M 0.013 0.014 0.012
(0.63) (0.47) (0.42)
F-F 0.118 0.053 0.036
(0.13) (0.30) (0.31)
R-square 0.176 0.175 0.177 0.134 0.134 0.134 0.137 0.137 0.137
Adjusted R-square 0.037 0.036 0.038 0.014 0.013 0.013 0.014 0.014 0.014
N 306 306 306 304 304 304 297 297 297

46
Table 8: Female analysts, female CFOs, and forecast accuracy
This table reports the impact of female analysts on forecast accuracy as in Equations (4a) and (4b) below.
ForecastAccuracyPerAnalystit+1 = 0 + 1(Female Analyst)it + 2-8(Firm variables)it-1 + it

ForecastBiasPerAnalystit+1 = 0 + 1(Female Analyst)it + 2-8(Firm variables)it-1 + it


The dependent variables are FE per Analystt+1, FR per Analystt+1, and FB per Analystt+1. Year t is the year of appointment.
Dependent and firm variables are winsorized at the 1% level on both tails. The above models include industry and year fixed effects.
See Appendix for the definition of variables. Numbers in parentheses are P-values.
a b
, , and c denote statistical significance at the 1, 5, and 10% levels, respectively (two tailed).

Full sample Female CFO firms Male CFO firms


Test variables FE per analyst FR per analyst FB per analyst FE per FR per FE per FR per
analyst analyst analyst analyst
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Female Analyst -0.015b -0.014c -0.006b -0.005b -0.017b -0.016b -0.002 -0.001 -0.017c -0.006b
(0.05) (0.07) (0.03) (0.03) (0.02) (0.04) (0.60) (0.49) (0.06) (0.04)
Female CFO -0.049b -0.011 -0.059a
(0.04) (0.18) (0.01)
Firm variables
Analyst Coveraget-1 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.001a 0.000
(0.14) (0.11) (0.06) (0.05) (0.34) (0.27) (0.09) <.0001 (0.01) (0.01)
Leveraget-1 0.004a 0.004a 0.001a 0.001a 0.004a 0.004a 0.001 0.000 0.004a 0.001a
(0.00) (0.00) (0.01) (0.01) (0.00) (0.00) (0.00) (0.12) (0.00) (0.01)
PPEt-1 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(0.77) (0.76) (0.97) (0.99) (0.81) (0.79) (0.00) <.0001 (0.95) (0.81)
EPt -1 0.029 0.030 -0.012 -0.012 0.054a 0.056a -0.188 0.037a 0.031 -0.012
(0.15) (0.14) (0.19) (0.20) (0.01) (0.01) (0.16) (0.01) (0.14) (0.23)
Losst-1 0.006 0.005 -0.003 -0.003 0.011 0.009 0.029c -0.007a -0.007 -0.005
(0.64) (0.74) (0.48) (0.43) (0.43) (0.54) (0.06) (0.01) (0.64) (0.29)
MTBt-1 -0.003 -0.003 -0.001 -0.001 0.000 0.000 0.004 -0.003a 0.001 0.000
(0.43) (0.40) (0.34) (0.33) (0.84) (0.82) (0.11) <.0001 (0.68) (0.83)
ROAt-1 -0.001 -0.001 0.000 0.000 -0.003 -0.003 0.000 0.000 -0.001 0.000
(0.41) (0.42) (0.39) (0.40) (0.48) (0.43) (0.38) (0.50) (0.21) (0.28)
Volatilityt-1 0.445a 0.442a 0.120b 0.119b 0.454a 0.450a 0.060a 0.012a 0.485a 0.130b
(0.01) (0.01) (0.02) (0.02) (0.01) (0.01) (0.00) (0.01) (0.01) (0.03)
Intercept -0.071 -0.070 0.006 0.007 -0.161b -0.160b -0.010 0.005c -0.105 -0.001
(0.34) (0.35) (0.79) (0.77) (0.03) (0.03) (0.62) (0.10) (0.20) (0.96)
R-square 0.041 0.042 0.030 0.030 0.039 0.040 0.487 0.417 0.053 0.037
Adjusted R-square 0.035 0.035 0.023 0.023 0.033 0.034 0.456 0.379 0.046 0.029
N 6,309 6,309 5,552 5,552 6,309 6,309 579 522 5,730 5,030

47