Debt is often a useful proxy for willingness to take on risk and new research suggests female chief executives are more risk averse than their male counterparts when it comes to owing cash.

Research from the University of Durham concludes that female CEOs take on less debt than male chief executives, precisely because they are more likely to dislike the risk involved.

The study looked at S&P 500 companies from 1993 to 2021 to monitor what happened to female CEO appointments and their use of debt.

The study found women borrowed 2.7% less than men. But the average value of investing or trading financial markets was also 2.9% lower than that of male colleagues.

Yeqin Zeng, leader of the research team, says the proportion of female CEOs in the S&P 500 has grown to 7% from 0.5% over the course of 20 years. “Our findings show that typically, female CEOs are less likely to get the company in debt, whilst men are more likely to be riskier CEOs.”

The phenomenon is more pronounced among the youngest female CEOs and when the ”level of market competition” is higher, as well as the level of litigation.

The team of academics, from business schools in China and the UK, also concludes that female CEOs have a greater influence than female chief financial officers.

Less overconfident?

The study will add to the argument that female leaders take a distinctly different approach when running companies. One counter could be that female CEOs borrow less because they possess “lower levels of overconfidence”. Zeng discounts this, concluding that “women exhibit greater risk aversion”.

Arguments over male versus female “performance” in leadership roles have become controversial in recent months.

In November, the Financial Times reported a new study from BlackRock, the world’s largest fund manager, which claimed investing in female corporate leaders “lifts” the financial performance of companies.

But that study attracted severe criticism from London Business School professor Alex Edmans. He said the study “makes fundamental errors”, uses “dubious measures” of financial performance and gender diversity, and was also guilty of “omitting basic controls”.

The BlackRock study was endorsed by Nicolai Tangen, chief executive of Norge Bank Investment Management, the world’s largest sovereign wealth fund.

Others argued the debate over gender diversity should move on from “performance” claims to issues of “equal opportunity” and other benefits created by improved gender balances.

The latest research will strike a chord for many, however not on whether women perform better than men, but on the different approach they take to running their businesses. Risk aversion may indeed be a significant characteristic of a female CEO’s time in charge.