LEWISBURG — A Bucknell study analyzed the benefits of having a female as a company’s chief financial officer.
Based on an analysis of earnings calls from 2,800 U.S. firms over 10 years, despite far fewer women holding top financial positions, women chief financial officers (CFOs) “verbally outperform male finance chiefs.”
The study was co-authored by Bucknell Freeman College of Management Professor Kate Suslava, accounting.
Julia Klevak, vice president, quantitative programming & research technology at PGIM Quantitative Solutions; and Joshua Livnat, Professor Emeritus of Accounting at New York University Stern School of Business, collaborated on the study summarizing analysis of approximately 105,000 corporate earnings calls from 2009 through 2019.
“Women CFOs are more concise, more conservative in their tone, more straightforward and use more numbers to illustrate their point,” Suslava said.
On the flip side, she said, the study found that male CFOs generally tend to be overly confident and optimistic, “muddy the water with euphemisms and clichés, and use more complex words and sentences.”
“Women CFOs use what we call ‘careful verbal behavior,’ so we also looked at men who behave like women to see if those behaviors benefit men as well,” Suslava said. “We found that for men CFOs who behave more like women CFOs, their stock prices go up more than men CFOs who behave less carefully.
Therefore, the market rewards careful verbal behavior for both genders.”
Suslava has conducted past research on the use of corporate euphemisms, one of the linguistic tools used by managers to soften their explanation of poor company performance in earnings calls. In the new study, she found that women use them less frequently than men.
“We study fog index, which measures obfuscation — language complexity and use of euphemisms and clichés — and it looks like women obfuscate less and use more straightforward language,” Suslava said. “They use less complex language when they talk, so they may be more straightforward.”
Suslava hopes the study will encourage more women to enter the finance industry, where she reports that women are currently severely underrepresented.
“The research is probably good news for women considering finance careers,” she said. “The gender bias is just huge (in finance),” she said. “The message to women is that you can do it, and you can be adding a lot of value to a company if you go into this industry, stick around and don’t give up.”
Suslava said that the fact there are so few women in the field may have affected their findings.
Union County Commissioner Stacy Richards said it is possible women explain things slightly differently in more detail than men.
Richards called it “getting out of that box a little bit.”
Richards previously worked in the White House during the administration of President Jimmy Carter.
Richards said people get used to different approaches in communications and how things will be presented. She said she believes everyone grows out of their own boxes.
Lexi Hall, a Bucknell University freshman in Management 1.01, said she believes gender does not separate what makes a better financial manager or planner.
“Characteristics, attributes, talents, and leadership styles are what are able to differentiate a strong leader,” said Hall, hinting that upbringing could play a part.
“I was raised to work to my greatest ability with a passion to demonstrate strength in the workforce and academic sphere as a woman,” she said.
Hall said her career goal is to be a female CEO.
“I would not say a man or a woman has better capabilities over one another,” she said.
Eleven percent of CFOs in the study’s sample were women, and they may be more effective communicators on earnings calls because they represent true “stars in the field,” as opposed to the men, who may have more talent diversity among their much larger sample.
Regardless of the numbers, the study still shows that women CFOs communicate differently than men, Suslava said, and they may be more effective communicators because of it.
“The key point is that they’re different. There is a gender difference, and this is what diversity is about,” she said. “The idea is that when you put diverse people together, they’ll generate diverse ideas.
What we are showing in this research is that we’re not all the same (among CFOs in earnings calls).”
Union County Treasurer Diane Reigle said her answers may surprise others.
“I believe it is not gender-based. I believe it is how the person is made,” she said. She said we are all made differently, “at the same time some may be more frugal where others want to have the latest invention to be able to provide a better service.”
Reigle said there may be other reasons.
“We so often want to put people in a box and say because they are women they will behave this way and a male will behave that way.”
Reigle said if you get past a person’s outside layer, “and look at the person on the inside we would be much better off. “
Reigle said her path to county treasurer started years ago. She began working at a local bank part-time, then became full-time. She ran and won a race for West Buffalo Township Tax Collector.
“I saw changes happening in the tax collection field and decided to look for another place of employment,” she said.
That decision put her in the county assessment office until her election as county treasurer.
“Each time I changed from one job to the next it was preparing me for County Treasurer,” Reigle said. “I worked under men, women and worked for myself. I have seen both manage money the same and manage money differently. Regardless to how money is managed, there can be extremes on both sides.”
Reigle said “a happy medium is always best.”
Suslava said she will let data speak for itself. “And I do see in the data that men and women tend to be different.”
Suslava noted Madhu Ranganathan, CFO of OpenText, a publicly-traded technology company, reached out to her personally and said “that my paper resonated with her own experiences.”
“I have received a similar kind of feedback from other financial professionals who attended my presentations,” Suslava said.