ESSEC Knowledge video about the Gender & Finance project

ESSEC Knowledge video about the Gender & Finance project

Estefania Santacreu-Vasut ESSEC Business School

Prof. François Longin ESSEC Business School

François Longin, Professor of Finance, and Estefania Santacreu-Vasut, Professor of Economics, present the Gender & Finance project and their recent research on the market reaction to the nomination of CEO based on the innovative simulation tool SimTrade.

Watch ESSEC Knowledge video to know more about Gender & Finance project.


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Experiments and gender at 3rd SEHO Conference

Gender & Finance at 3rd SEHO conference

Estefania Santacreu-Vasut ESSEC Business School
Prof. François Longin ESSEC Business School

Gender & Finance participated to the 3rd SEHO conference which took place in Lisbon on May 27-28 2019. We presented our experiment on the stock market reaction to CEO nominations as function of gender.

Experiments and gender

Joao Peixoto from ISEG chaired the session on “Experiments about Household Decision-Making”. Because gender is a key aspect of household analysis, all the experiments presented at the session had a gender component.

During the session we presented our paper Stock Market Reaction to Female CEO Nominations: Is the Market Gendered? which is based on a lab experiment.

CEO nominations by gender and aspirations

The keynote speakers of the conference were excellent, and we learned a lot. For instance, Professor Shelly Lundberg discussed the role of aspirations to stimulate more gender equal career paths. Because we study the impact of the nomination of a female or male CEO, our research contributes to understand what are the barriers to the creation of female role models that can influence the aspirations of future generations.

Gender in different cultures

Regarding our paper, we were proud to receive very positive feedback from session participants. Furthermore, we received interest in collaboration in the Portuguese environment. Indeed, it would be interesting to undertake our experiments in different cultural environments.

Female CEO and household gender issues

In future work we plan to study the impact of female CEO nominations by adding household related information (marriage status, children, etc…). Therefore, we will soon organize new experiments.

Contact us for more information or for research collaborations! And check our presentation slides!

Presentation on gender and finance

Prof. François Longin and Prof. Santacreu-Vasut
ESSEC Business School

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Stock market reaction to female CEO nominations: Is the market gendered?

New research article: Stock market reaction to female CEO nominations: Is the market gendered?

Estefania Santacreu-Vasut ESSEC Business School

Prof. François Longin ESSEC Business School

We are happy to share with you our latest research article: Stock market reaction to female CEO nominations: Is the market gendered?

Barriers to female leadership are both formal and informal. Among informal ones, culturally grounded negative stereotypes play an important role in explaining female scarcity in CEO positions. These are also reflected not only in career advancement of women but also in how markets factor in gender-related information. Indeed, studies find that stock markets react negatively to the nomination of female CEOs.

You can download our research article below.

Presentation on gender and finance

Research subject on female CEO nominations

Stock markets react negatively to the nomination of female CEOs. Recent research has argued that this may reflect the investors’ negative perception about female leadership and media reporting that is biased against women. In this paper, we propose a new explanation based on the hypothesis that the market is ‘gendered’. As female and male market participants may exhibit differences in preferences and in biases towards gender, gender diversity in the financial sector potentially impacts the market outcomes.

Research design based on experimental simulations

To test this hypothesis, we run a simulation-based lab experiment in which female and male participants trade stocks of a company in response to the nomination of its future CEO, who could be either a man or a woman. We find that when a female CEO is appointed, the female participants’ perception is positive (they buy stocks), while the male participants’ perception is negative (they sell stocks). The opposite result holds when a male CEO is appointed. We interpret our findings drawing from homophily, entitativity and expectation theories.

Policy implication about gender

The policy implication of our study is that the gender issue is not only an issue reflected at the corporate level in the need to nominate more female CEOs but also an issue at the financial industry level related to the need to increase gender diversity by attracting more women in investment occupations; finally it is an issue at the societal level related to the need to change individual and collective stereotypes about female leadership.

 

Prof. François Longin and Prof. Santacreu-Vasut
ESSEC Business School

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Impact of gender bias on pricing of art

Is art made by female artists sold at a lower price simply because they were made by women?
Gender & Finance Literature Review Series #7: Adams, Kräussl, Navone and Verwijmeren (2017)

In this G&F LRS #7, we analyze the following research paper:

Adams RB, Kräussl R, Navone MA, Verwijmeren P. 2017. Is gender in the eye of the beholder? Identifying cultural attitudes with art auction prices. Working paper. Goethe University.

This paper allows us to understand the gender bias in art auction prices. Adams et al.(2017) concentrate only on the demand side of the problem i.e. they look at pricing of art in auction houses. They assume that there is no problem with the supply of art by female artists.

What is the methodology used by the authors?

The authors used two experiments to draw inferences on the relationship between gender of the artist and prices of the paintings. The first experiment included asking the population to guess the gender of the artist by observing a pre-decided list of paintings. The participants also had to provide a number that they would bid foreach of the paintings. This experiment helped the authors to analyze two aspects. Firstly, it helped them to analyze whether it is obvious that a piece of art is made by a female artist i.e. does female made art have observable similarities in themes or styles. Secondly, it helped them the analyze the impact of perceived gender of the artist (by the participants) on the prices bid for the paintings. Under the second experiment, each of the participants was asked to rate a list of 10 paintings, but the difference being that this time they could see the names of the artists (and hence recognise the gender of the artists before making a bid). This helped the authors analyze if there are any biases towards prices bid for paintings of female artists.

What are the results obtained by them?

From the first experiment, the authors inferred that the participants (people who were frequenting art galleries and auction houses) guessed majority of the paintings to be made by male artists. With regards to the bid prices for the paintings, it was inferred that the participants, who mainly comprised of affluent males frequenting art auction houses, did not appreciate female art as much as they did for paintings made by males (as was obvious from their low bids for female made art). For the second experiment, the authors found that the respondents perceived female made paintings to be of a lower quality, which was evident from the lower score given to female made art.

What do we recommend?

Firstly, it may be a useful technique to hide gender related characteristics, so as to avoid bias based on whether the person is male or female. Moreover, there is an issue of wrong valuation of the particular products because they are based on gender stereotypes. For example, investors might be biased against the stocks of a company because it has a woman CEO, art collectors might under-value a painting because it has been made by a female artist etc. Hence there should be mechanisms to mitigate this problem as well.

You can download the PowerPoint presentation below. Please feel free to reach out to us for more information!

Presentation on gender and finance
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Are women more risk-averse than men?

Are women more risk-averse than men? Is this pattern especially prominent in industries like finance?
Gender & Finance Literature Review Series #6: Adams and Ragunathan (2015)

In this G&F LRS #6, we analyze the following research paper:

Adams RB, Ragunathan V. 2017. Lehman sisters. Working paper. University of South Wales.

This paper allows us to understand if women are systematically more risk-averse than men. Adams and Ragunathan (2015) concentrate on a specific industry i.e. the finance industry with a focus on banking. They study in detail to check if the presence of women as top executives, led the banks to perform better during the times of crises.

What is the methodology used by the authors?

The authors consider origin risk (risks measured on the date that banks first appear in CSRP) as an exogenous measure for banks to see if boardroom diversity responds to changes in risk (based on Cheng, Hong and Scheinkman, 2015). Secondly, they account for gender diversity in the risk regressions using a Blau index of gender balance in director connections. In order to analyze whether more gender diverse boards have different responses which help to improve their performance, they consider the research done by Adams and Ferreira (2009). Thirdly, they try to find out if there is a difference between women who choose a career in finance and others who do not, especially with reference to the risk-taking capabilities of these women. In order to analyze this further, they draw upon the research done by Sapienza, Zingales and Maestripieri (2009). The research considers the entire cohort of MBA students at the University of Chicago (including men). They run test on the responses of the sample to check if women have more risk-taking abilities than men. Finally, they try to analyze the participation of women as board members in financial firms in comparison with non-financial firms. They do this by drawing upon the research done by Adams and Kirchmaier (2015b).

What are the results obtained by them?

They find that there is no conclusive evidence suggesting that boardroom gender diversity is associated with more risk-taking capabilities, especially in the event of a crisis. Secondly,
male directors are more punctual and there is less absenteeism on their side when there are more women directors in the board. Thirdly, in the cohort of MBA students, women are more risk-averse than men. Women who opt for a career in finance have lower risk-aversion than other women who opt for careers in other industries. Whereas, this is not the case for the male students. And finally, they found that fewer women were on the boards of financial firms as compared to industrial firms.

You can download our PowerPoint presentation below. Please feel free to reach out to us for more information!

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Do gender stereotypes depend on culture?

Are there any differences in the risk taking abilities of males and females? Does culture have an impact on these stereotypes?
Gender & Finance Literature Review Series #5: Pondorfer, Barsbai and Schmidt (2016)

In this G&F LRS #5, we analyze the following research paper:

Pondorfer A, Barsbai T, Schmidt U. 2017 “Gender Differences in Stereotypes of Risk Preferences: Experimental Evidence from a Matrilineal and a Patrilineal Society” Management Science, 63(10) 3147-3529.

This paper allows us to understand the impact of cultural differences on the stereotypes of risk taking abilities between the two genders. Pondorfer, Barsbai and Schmidt (2017) examine stereotypes based on gender risk taking ability while taking samples from two non-traditional societies, the patrilineal Palawan in the Philippines and the matrilineal Teop in Papua New Guinea. They are also interested in finding culture specific reasons for stereotypes based on gender.

Why compare these two societies?

Both the societies had similar occupational patterns with farming being the primary industry and fishing or animal husbandry being the secondary one. The major difference was that the Teop society is matrilineal in nature, which means that the line of descent goes through the daughter and not the son. This means that women have rights over resources unlike the Palawan society where men had these rights.

How was the experiment conducted?

The sample population is asked to choose from a series of 50/50 gambles. Each of the 5 gambles have a certain payoff and another payoff based on a particular probability. The other payoff keeps increasing in expected payoff and risk as is evident from an increasing standard deviation. Each person is asked to pick a gamble for himself/herself on which they would pay real money. Secondly, each person is asked to guess that which gamble would be chosen by a male and a female member from their particular society. This would help to know the stereotype that is prevalent about the genders’ risk preferences in the particular society. In totality 103 people from the Palawan society and 96 people from the Teop society were asked to do this experiment.

What did the authors infer?

 It was found that, irrespective of the gender criterion, Palawan members were less risk averse than Teop members. While 55% of the Palawan sample chose risky games, only 33% of the Teop sample did so. There were no observable differences in gender risk preferences across both societies. The entire Palawan sample makes higher predictions about the other peoples’ gamble choices than the Teop samples. This result is seen to be true disregarding the gender criterion. Men from Palawan (patrilineal society) underestimate womens’ risk taking ability. On the contrary, men from matrilineal Teop overestimate womens’ risk taking ability. Women from both societies have almost accurate    estimations of risk for the men in the society. Both men and women in both societies predict their own gender’s risk taking ability very accurately. Pondorfer, Barsbai and Schmidt conclude that gender is not a major determinant of risk preferences. On the contrary, ‘nurture’ or the cultural environment in which the people live plays a very important role in the perception of risk taking ability.

You can download the PowerPoint presentation below. Please feel free to reach out to us for more information!

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Unblinding gender for Winning Girls!

Unblinding gender in finance for Winning Girls!

Do stereotypes influence our choices? Are Winning Girls aware? 

Answering these questions is particularly important at a young age. Indeed, high school students’ choices today may shape career opportunities tomorrow. Are Winning Girls conscious of how stereotypes may influence their choices?

Why gender stereotypes matter?

Gender stereotypes may blur the process of information gathering. They may also contribute to self-censoring, preventing young girls to choose careers in finance.  How can female young students become conscious of this?

A workshop to become conscious of stereotypes

The founders of Gender & Finance, Professor François Longin and Professor Estefania Santacreu-Vasut will soon host a workshop at ESSEC Business School addressed to female high school students with three aims:

  1. guiding them in their future choices
  2. making them aware of existing stereotypes
  3. empowering them in their decision-making processes

Practical information and novelty

  • When? On June 15th 2018
  • Where? In the K-Lab of ESSEC Business School thanks to a simulation from Sim Trade
  • Who? Participants will be composed of a group of female high school students of the Winning Girls Project association created by its president Laurence Moncourrier 
  • Why? Because stereotypes may influence decision-making at an early stage by creating expectations, reinforcing gender norms and influencing career orientation
  • What is new? Traditionally, the “Gender & Finance” workshop has been addressed to graduates and professionals. This will be the first time that high school students participate in our workshops!

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The Global Findex database by World Bank

The Global Findex database by World Bank: Data Links for Gender and Finance #2

Studying financial inclusion is important to address gender inequality in the financial realm. This post introduces The Global Findex Database, a database that measures financial inclusion.

What is financial inclusion?
Financial inclusion is the process of making formal financial services accessible and
affordable to all. It involves providing access to bank accounts for deposit and withdrawal of money, along with extension of micro-credit.

Why is it important?
Studies show that financial inclusion is pivotal to many aspects of development around the
world. It is proven to improve people’s earning potential because it leads to a more
systematic usage and saving pattern of money; it also provides the option to poor people to
expand their income by availing credit facilities. There is also a gender aspect to the increase in financial inclusion. Studies have shown improving access to formal financial services improves the wellbeing of female-headed households and increases their savings.

Where can you find data on financial inclusion?
To encourage research in the field, the World Bank has come up with The Global Findex
Database. The Global Findex Database is a collection and analysis of data conducted by the
World Bank on the borrowing, spending payments and risk management abilities of people. It has been started with support from the Bill and Melinda Gates foundation and has been calculated once in 3 years since 2011. It is primarily an indicator to analyze the extent of financial inclusion in the world with focus on the developing economies.

You can download the PowerPoint presentation below. Please feel free to reach out to us for more information!

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Do investors like female CEO?

How do investors react when a female CEO is appointed? Does it affect other female-led firms as well? 
Gender & Finance Literature Review Series #4: Dixon-Fowler, Ellestrand and Johnson (2013)

In this G&F LRS #4, we analyze the following research paper:

Dixon-Fowler HR, Ellstrand AE, Johnson JL. 2013. Strength in numbers or guilt by association? Intragroup effects of female chief executive announcements. Strategic Management Journal 34(12): 1488–1501.

This paper allows us to understand the impact that the appointment of a female CEO has on the performance of that particular company and on the performance of other companies with female CEOs.

Questions
The paper by Dixon Fowler, Ellestrand and Johnson (SJM 2013) aims to examine
three questions:


1) Try to research if firms with existing female CEOs will experience positive stock
market reactions when there is a succession event resulting in the appointment of
a female CEO at another firm. As a follow up to this hypothesis, they also examine if firms with existing female CEOs will experience negative stock market reactions when there is a succession event resulting in the appointment of a female CEO at another firm.

2) Examine if media reports of CEO appointment announcements are more likely to
link female CEOs as an entitative group based on gender compared to male CEO counterparts.

3) Dwell on whether firms with existing female CEOs will experience negative stock
market reactions when there is a succession event resulting in an announcement of
a female CEO dismissal at another firm.

Sample
The sample used in their study consists of 369 firms in the portfolio of appointment events
and 90 firms in the portfolio of dismissal events at female-led firms, and 424 in the portfolio of appointment events for male-led firms.

Methodology
To test hypotheses 1 and 3, they use an event study methodology with the CRSP (1991-2006) equally-weighted index as a proxy for market returns. They conduct a text analysis on the male and female appointments to test hypothesis 2.

Findings
Their findings suggest that, firms with existing female CEOs do not experience positive stock market reactions when there is a succession event resulting in the appointment of a female CEO at another firm. To investigate about the follow up hypothesis, they find that firms with existing female CEOs experience negative stock market reactions when there is a succession event resulting in the appointment of a female CEO at another firm. In the analysis of Hypothesis 2 it was found that 55% of female CEO announcements referred to other female CEOs whereas no male CEO announcements referred to other male CEOs. Finally, for the third hypothesis they find that firms with existing female CEOs do not
experience negative stock market reactions when there is a succession event resulting in an announcement of a female CEO dismissal at another firm.

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What is the cause for the gender wage gap? How can it be solved?

What is the cause for the gender wage gap? How can it be solved?
Gender & Finance Literature Review Series #3: Goldin (2014)


In this G&F LRS #3, we analyze the following research paper:

Goldin C. 2014. A grand gender convergence: Its last chapter. American Economic Review 104(4): 1091-1119.

This paper shows that while roles of men and women are converging over time, there is a need to write a ‘last chapter’ in this convergence story. There is a decreasing but existing gender wage gap in the labor market. Goldin (2014) investigates the reasons and variations across major occupations.

Gender wage gap across occupations

The general explanation to the wage gap is that women have a lower bargaining power, will to compete and have higher chances of leaving work for family reasons. However, the author finds that the real problem is that the amount of time worked in a day or week and the amount of time out of the labor force have a direct impact on the earnings. An interesting finding by Goldin (2014) is that though gender wage gap has reduced across all age groups from their previous statuses, the total gender wage gap remains unchanged. The author tries to understand the reason for this.

Goldin (2014) conducts regression analysis on being a woman and being paid in the various sectors- Health, Business, Technology, Science and Other. Across multiple occupations, the Science and Technology exhibit the best results. It appears that this industry offers perks of working part time and provides flexibility in work hours for women with families. The author then formulates an economic hypothesis that an occupation with a linear pay (i.e. where wages are directly related to hours worked) will exhibit lower gender wage gaps. Similarly, an occupation with a non-linear pay will exhibit greater gender wage gap. She proves this hypothesis by regression and finds again that Science and Technology exhibit least gender wage gap. Goldin (2014) extends this hypothesis and analyzes this linear or non-linear earnings to time relationship and reasons for the gender wage gap in Business, Law and Pharmaceuticals.

 The Last Chapter

Goldin (2014) concludes that the gender wage gap exists and varies across ages and occupations. This residual gap is because hours worked in continuity are more important in some occupations while not so in others. Flexibility has a penalty in these fields, including in Finance, leading to non-linear earnings for women. The ‘Last Chapter’ thus, must contain a work structure that has a more linear payment, greater flexibility leading to a reduced gender wage gap.

You can download our PowerPoint presentation below. Please feel free to reach out to us for more information. Here’s wishing you a Happy 2018!

Presentation on gender and finance
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