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The role of identity in corporate governance: evidence from gender differences in the audit committee chair-chief financial officer dyad

Musaib Ashraf¹; Aishwarrya Deore²; Ranjani Krishnan¹

¹ Michigan State University · ² Georgetown University

We examine the role of identity in corporate governance, focusing on an important dyad: audit committee chair and chief financial officer. Drawing on identity theory, which argues that people have lower trust in those they perceive to be different from themselves, we posit that the audit committee chair’s trust in the chief financial officer is lower when the two are different genders. We find that a gender difference between the two is associated with greater monitoring by the chair, consistent with lower trust. This effect is attenuated when a firm has value-based controls that promote diversity tolerance or when a chief financial officer seems more trustworthy. We find no evidence that the increased monitoring improves financial reporting. However, we find evidence that the increased monitoring generates negative externalities by distracting the chief financial officer, as proxied by lower operational performance. Our findings underscore the importance of identity in corporate governance.

DOI

10.1007/s11142-025-09921-4

Volume

31 (1)

Pages

564-612

Language

en

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