Team gender diversity and investment decision-making behavior
Abstract
Purpose
The purpose of this paper is to investigate whether the gender composition of a fund management team influences investment decision-making behavior. Specifically, we focus on how portfolio choice is affected by team risk aversion and loss aversion.
Design/methodology/approach
Using an experimental economics approach, the paper examines the relationship between gender diversity and investment decisions. Teams of four persons each were given the task of making investment portfolio management decisions.
Findings
The paper finds that team composition does influence financial decisions with regard to the assessment of risk and loss. The paper finds evidence that a male presence increases the probability of selecting a higher risk investment. However, the all male teams are not the most risk seeking. Moreover, having a male presence can increase loss aversion.
Originality/value
In the context of workforce composition, these results could have important implications for team investment decisions driven by the assessment of risk and return tradeoffs. To curb excessive risk taking and loss aversion, the findings would suggest that understanding the role of gender diversity in risk management would be useful in effecting change.
Keywords
Acknowledgements
JEL classification – G11
The authors would like to thank Cornell University's Institute for Social Sciences and the Cornell University Lab for Experimental Economics and Decision Research (LEEDR) for financial support. The authors thank Catherine Eckel, David Ng, William Schulze, seminar participants at the Duke University Terry Sanford Institute of Public Policy RNREI Research Conclave and seminar participants in the Department of Economics seminar at the Iowa State University for useful suggestions and discussions. They also thank Weiqin Dong, Hao Jin, Joe Lu, Sayako Seto, Feng Wang, and Joyce Wang for research assistance. They also thank Annemie Maertens and the LEEDR lab staff for lab assistance. All errors are their own.
Citation
L. Bogan, V., R. Just, D. and S. Dev, C. (2013), "Team gender diversity and investment decision-making behavior", Review of Behavioral Finance, Vol. 5 No. 2, pp. 134-152. https://doi.org/10.1108/RBF-04-2012-0003
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited