Given the importance of analysts’ earnings forecasts in the accounting/finance literature, this study examines the effect of gender-based behavioral differences of corporate top executives on the accuracy of analysts’ forecasts. The results suggest that the predispositions of female top executives provide a clear benefit to the market by virtue of more accurate analyst forecasts.

Top executives’ gender and analysts’ earnings forecasts

  • Sudip Datta, Trang Doan, Mai Iskandar-Datta
  • Financial Letters
  • A version of this paper can be found here
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What are the Research Questions?

  1. Does the gender of top executives affect the accuracy of analysts’ earnings forecasts?
  2. Were the results robust to other explanations?

What are the Academic Insights?

  1. YES. The results of the analysis of the analysis between the gender of the CEO/CFO and the accuracy of analyst forecasts suggests that accuracy increases when the CEO/CFO is female.  In this study, forecast accuracy is measured by forecast error (FE) and the dispersion of forecast error (FD), while gender is binomial, 1 if female, 0 if male. The influence of CEO gender was significant and economically substantial as estimated in models 1 and 2, found in the chart below. Surprisingly, there was no link found between the CFO gender and analyst accuracy as indicated in Models 3 and 4.
  2. YES. The conclusions are similar when several control variables (audit quality, financial distress, and earning surprise) were included. However, when measures of information asymmetry were introduced, the impact of gender emerged. The authors made the argument that when the execs were female executives and information asymmetry for the firm was high, then the improved analyst forecast accuracy was likely due to the female exec style (i.e., accounting/financial choices) that reduce agency problems. It seems that female communication styles are amplified in the presence of high information asymmetry. Firms should benefit to a greater extent from having female CEOs/CFOs, the idea being that female executives would produce higher quality reporting, resulting in more precise forecasts.

Why Does it Matter?

The results presented here add to the research in a number of areas, including: the analyst forecast literature; the literature on behavioral accounting and finance with respect to corporate decision-making all in the context of gender; and the dominant role of the CEO on information transparency.

The Most Important Chart from the Paper

The results are hypothetical results and are NOT an indicator of future results and do NOT represent returns that any investor actually attained.  Indexes are unmanaged and do not reflect management or trading fees, and one cannot invest directly in an index.


This study adds a behavioral dimension to the analysts’ earnings forecast literature by examining
the effect of executives’ gender on forecast accuracy. We theorize that these gender-based
behavioral differences can influence analysts’ forecast accuracy. Our research documents that
the presence of female CEOs significantly improves analysts’ forecast accuracy across all firms,
reflecting CEO’s dominant position, while female CFOs have a positive influence on analyst
forecast accuracy only for firms with greater information asymmetry. Overall, the evidence shows
that analysts are able to draw more accurate assessment of the firm’s prospects for corporations
led by female executives.

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About the Author: Tommi Johnsen, PhD

Tommi Johnsen, PhD
Tommi Johnsen is the former Director of the Reiman School of Finance and an Emeritus Professor at the Daniels College of Business at the University of Denver. She has worked extensively as a research consultant and investment advisor for institutional investors and wealth managers in quantitative methods and portfolio construction. She taught at the graduate and undergraduate levels and published research in several areas including: capital markets, portfolio management and performance analysis, financial applications of econometrics and the analysis of equity securities. In 2019, Dr. Johnsen published “Smarter Investing” with Palgrave/Macmillan, a top 10 in business book sales for the publisher.  She received her Ph.D. from the University of Colorado at Boulder, with a major field of study in Investments and a minor in Econometrics.  Currently, Dr. Johnsen is a consultant to wealthy families/individuals, asset managers, and wealth managers.

Important Disclosures

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Third party information may become outdated or otherwise superseded without notice.  Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency has approved, determined the accuracy, or confirmed the adequacy of this article.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. Our full disclosures are available here. Definitions of common statistics used in our analysis are available here (towards the bottom).

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