Does female executives’ involvement in corruption affect firm value? European evidence

Abstract

The contentious literature concerning the relationship between corporate corruption and firm performance suggests a potential research avenue to examine the influence of gender on corruption. Two-stage least squares estimations performed on a sample of EU countries reveal a robust negative association between female corrupt executives and firm value. Our findings indicate that firms led by corrupt female executives tend to have a more detrimental impact on company value compared with those led by corrupt male executives. This chapter represents the inaugural attempt to investigate the magnitude of women's involvement in corruption and its impact on firm performance, with results supporting corruption's detrimental impact on firm value, evidencing a ‘‘sand-the-wheel’’ effect. Our research is significant in that it uses firm-specific data to gain a deeper understanding of the issue of corporate fraud and the involvement of women. Theoretical and managerial implications, including suggestions for future research, are outlined.