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The effects of gender composition of senior management on the economic fallout

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  • Cynthia Bansak
  • Mary Graham
  • Allan Zebedee

Abstract

In this article, we test the proposition that the presence of women in management impacts decision-making outcomes. In particular, we hypothesize that the greater the proportion of women on the senior management team, the lower the degree of risks taken at the firm level. Using data from the US Equal Employment Opportunity Commission (EEOC), the Center for Research in Security Prices (CRSP) and the US Treasury in this study, we create firm-level gender ratios and control for firm size to assess the impact on two separate risk outcome measures. We find some evidence that financial institutions with more women in the senior management team avoided having to accept Troubled Asset Relief Program (TARP) funds, but that the proportion of women executives has no impact on stock return volatility.

Suggested Citation

  • Cynthia Bansak & Mary Graham & Allan Zebedee, 2011. "The effects of gender composition of senior management on the economic fallout," Applied Economics Letters, Taylor & Francis Journals, vol. 18(16), pages 1603-1607.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:16:p:1603-1607
    DOI: 10.1080/13504851.2011.554364
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    References listed on IDEAS

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    1. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 605-628, November.
    2. Nina Smith & Valdemar Smith & Mette Verner, 2006. "Do women in top management affect firm performance?A panel study of 2,500 Danish firms," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 55(7), pages 569-593, October.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Brad M. Barber & Terrance Odean, 2001. "Boys will be Boys: Gender, Overconfidence, and Common Stock Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 261-292.
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    Cited by:

    1. Lamiraud, Karine & Vranceanu, Radu, 2018. "Group gender composition and economic decision-making: Evidence from the Kallystée business game," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 294-305.
    2. Nieboer, Jeroen, 2015. "Group member characteristics and risk taking by consensus," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 81-88.
    3. Lima de Miranda, Katharina & Detlefsen, Lena & Schmidt, Ulrich, 2019. "Can gender quotas prevent risky choice shifts? The effect of gender composition on group decisions under risk," Kiel Working Papers 2135, Kiel Institute for the World Economy (IfW Kiel).

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