Hostname: page-component-76fb5796d-22dnz Total loading time: 0 Render date: 2024-04-25T10:38:35.625Z Has data issue: false hasContentIssue false
  • English
  • Français

Gender Differences in Executives’ Access to Information

Published online by Cambridge University Press:  22 May 2017

A. Can Inci ,
M. P. Narayanan  and
H. Nejat Seyhun
Get access Rights & Permissions [Opens in a new window]

Abstract

We provide novel evidence on gender differences in insider-trading behavior and the profitability of senior corporate executives. On average, both female and male executives make positive profits from insider trading. Males, however, earn significantly more than females in equivalent positions and also trade more than females. These gender differences disappear when we limit the sample to firms in which female trading is relatively high. Collectively, these results suggest that female executives have a disadvantage relative to males in access to inside information, even if they have equal formal status, and informal networks may play an important role in attenuating this disadvantage.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 52 , Issue 3 , June 2017 , pp. 991 - 1016
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

1

We thank Paul Malatesta (the editor) and Alessandro Previtero (the referee) for extensive comments and suggestions that have benefited the paper. We also thank Wayne Baker, Brad Barber, Sugato Bhattacharyya, David Hess, David Louton, Paolo Pasquariello, Amiyatosh Purnanandam, Gretchen Spreitzer, James Westphal, Frank Yates, and seminar and conference participants at the 2013 Financial Management Association meetings, the 2013 European Financial Management Association meetings, City University of London, KU Leuven, Özyeğin University, and Boğaziçi University for useful comments and discussions. This is a substantially revised version of, and supersedes, the paper titled “Are Women Executives Disadvantaged?”

References

Ahern, K., and Dittmar, A.. “The Changing of the Boards: The Impact on Firm Value of Mandated Female Board Representation.” Quarterly Journal of Economics, 127 (2012), 137–197.CrossRefGoogle Scholar
Atkinson, S. M.; Baird, S. B.; and Frye, M. B.. “Do Female Fund Managers Manage Differently?” Journal of Financial Research, 26 (2003), 1–18.CrossRefGoogle Scholar
Bajtelsmit, V. L., and VanDerhei, J. L.. “Risk Aversion and Pension Investment Choices.” In Positioning Pensions for the Twenty-First Century, Gordon, M. S., ed. Philadelphia, PA: University of Pennsylvania Press (1997), 45–66.Google Scholar
Barber, B. M.; Lehavy, R.; and Trueman, B.. “Comparing the Stock Recommendation Performance of Investment Banks and Independent Research Firms.” Journal of Financial Economics, 85 (2007), 490–517.CrossRefGoogle Scholar
Barber, B. M., and Odean, T.. “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment.” Quarterly Journal of Economics, 116 (2001), 261–292.Google Scholar
Benos, A. V.“Aggressiveness and Survival of Overconfident Traders.” Journal of Financial Markets, 1 (1998), 353–383.Google Scholar
Bernasek, A., and Shwiff, S.. “Gender, Risk, and Retirement.” Journal of Economic Issues, 35 (2001), 345–356.Google Scholar
Bertrand, M., and Hallock, K.. “The Gender Gap in Top Corporate Jobs.” Industrial and Labor Relations Review, 55 (2001), 3–21.Google Scholar
Biais, B.; Hilton, D.; Mazurier, K.; and Pouget, S.. “Judgmental Overconfidence, Self-Monitoring, and Trading Performance in an Experimental Financial Market.” Review of Economic Studies, 72 (2005), 287–312.CrossRefGoogle Scholar
Byrnes, J.; Miller, D. C.; and Schafer, W. D.. “Gender Differences in Risk Taking: A Meta-Analysis.” Psychological Bulletin, 125 (1999), 367–383.Google Scholar
Caballé, J., and Sákovics, J.. “Speculating against an Overconfident Market.” Journal of Financial Markets, 6 (2003), 199–225.Google Scholar
Carhart, M. M.“On Persistence in Mutual Fund Performance.” Journal of Finance, 52 (1997), 57–82.CrossRefGoogle Scholar
Catalyst. “Fortune 500 Corporate Officer Positions Held by Women.” Available at http://www.catalyst.org/knowledge/fortune-500-corporate-officer-positions-held-women(2013a).Google Scholar
Catalyst. “Fortune 500 Board Seats Held by Women.” Available at www.catalyst.org/knowledge/fortune-500-board-seats-held-women(2013b).Google Scholar
Catalyst. Historical List of Women CEOs of the Fortune Lists: 1972–2014. New York: Catalyst(2014).Google Scholar
Charness, G., and Gneezy, U.. “Strong Evidence for Gender Differences in Risk Taking.” Journal of Economic Behavior and Organization, 83 (2012), 50–58.Google Scholar
Choi, J.; Laibson, D.; Madrian, B.; and Metrick, A.. “Reinforcement Learning and Savings Behavior.” Journal of Finance, 94 (2009), 233–263.Google Scholar
Croson, R., and Gneezy, U.. “Gender Differences in Preferences.” Journal of Economic Literature, 47 (2009), 448–474.Google Scholar
Dahlbom, L.; Jakobsson, A.; Jakobsson, N.; and Kotsadam, A.. “Gender and Overconfidence: Are Girls Really Overconfident?” Applied Economics Letters, 18 (2011), 325–327.Google Scholar
Daniel, K. D.; Hirshleifer, D.; and Subrahmanyam, A.. “Investor Psychology and Investor Under- and Overreactions.” Journal of Finance, 53 (1998), 1839–1886.Google Scholar
Daniel, K. D.; Hirshleifer, D.; and Subrahmanyam, A.. “Mispricing, Covariance Risk, and the Cross Section of Security Returns.” Journal of Finance, 5 (2001), 921–965.CrossRefGoogle Scholar
Davies-Netzley, S. A.“Women above the Glass Ceiling: Perceptions on Corporate Mobility and Strategies for Success.” Gender and Society, 12 (1988), 339–355.Google Scholar
Deaves, R.; Lüders, E.; and Luo, G. Y.. “An Experimental Test of the Impact of Overconfidence and Gender on Trading Activity.” Review of Finance, 13 (2009), 555–575.CrossRefGoogle Scholar
Denis, D., and Xu, J.. “Insider Trading Restrictions and Top Executive Compensation.” Journal of Accounting and Economics, 56 (2013), 91–112.CrossRefGoogle Scholar
Dwyer, P. D.; Gilkeson, J. H.; and List, J. A.. “Gender Differences in Revealed Risk Taking: Evidence from Mutual Fund Investors.” Economics Letters, 76 (2002), 151–158.Google Scholar
Eckel, C. C., and Grossman, P. J.. “Men, Women and Risk Aversion: Experimental Evidence.” In Handbook of Experimental Economics Results, Plott, C. and Smith, V., eds. New York, NY: Elsevier (2008), 1061–1073.Google Scholar
Gervais, S., and Odean, T.. “Learning to Be Overconfident.” Review of Financial Studies, 14 (2001), 1–27.Google Scholar
Glaser, M., and Weber, M.. “Overconfidence and Trading Volume.” Geneva Risk Insurance Review, 32 (2007), 1–36.Google Scholar
Grossman, S. J., and Stiglitz, J. E.. “On the Impossibility of Informationally Efficient Markets.” American Economic Review, 70 (1980), 393–408.Google Scholar
Hinz, R. P.; McCarthy, D. O.; and Turner, J. A.. “Are Women Conservative Investors? Gender Differences in Participant-Directed Pension Investments.” In Positioning Pensions for the Twenty-First Century, Gordon, M. S., ed. Philadelphia, PA: University of Pennsylvania Press (1997), 91–106.Google Scholar
Hirshleifer, D., and Luo, G. Y.. “On the Survival of Overconfident Traders in a Competitive Securities Market.” Journal of Financial Markets, 4 (2001), 73–84.Google Scholar
Ibarra, H.“Homophily and Differential Returns: Sex Differences in Network Structure and Access in an Advertising Firm.” Administrative Science Quarterly, 37 (1992), 422–447.Google Scholar
Ibarra, H.“Personal Networks of Women and Minorities in Management: A Conceptual Framework.” Academy of Management Review, 18 (1993), 56–87.Google Scholar
Jianakoplos, N. A., and Bernasek, A.. “Are Women More Risk Averse?” Economic Inquiry, 36 (1998), 620–630.Google Scholar
Johnson, J. E. V., and Powell, P. L.. “Decision Making, Risk and Gender: Are Managers Different?” British Journal of Management, 5 (1994), 123–138.Google Scholar
Kanter, R. M. Men and Women of the Corporation. New York, NY: Basic Books (1977a).Google Scholar
Kanter, R. M.“Some Effects of Proportions on Group Life: Skewed Sex Ratios and Responses to Token Women.” American Journal of Sociology, 82 (1977b), 965–990.CrossRefGoogle Scholar
Kunze, A., and Miller, A.. “Women Helping Women? Evidence from Private Sector Data on Workplace Hierarchies.” Working Paper, Norwegian School of Economics (2014).Google Scholar
Kyle, A. S., and Wang, F. A.. “Speculation Duopoly with Agreement to Disagree: Can Overconfidence Survive the Market Test?” Journal of Finance, 52 (1997), 2073–2090.Google Scholar
Lyness, K. S., and Thompson, D. E.. “Climbing the Corporate Ladder: Do Female and Male Executives Follow the Same Route?” Journal of Applies Psychology, 85 (2000), 86–101.Google Scholar
Miller, J. Pathways in the Workplace. Boston, MA: Cambridge University Press (1986).Google Scholar
Moore, G.“Women in Elite Positions: Insiders or Outsiders?” Sociological Forum, 3 (1988), 566–585.Google Scholar
Morrison, A. M., and Von Glinow, M. A.. “Women and Minorities in Management.” American Psychologist, 45 (1990), 200–208.Google Scholar
Niederle, M., and Vesterlund, L.. “Do Women Shy Away from Competition? Do Men Compete Too Much?” Quarterly Journal of Economics, 122 (2007), 1067–1101.Google Scholar
Niessen, A., and Ruenzi, S.. “Sex Matters: Gender Differences in a Professional Setting.” Working Paper, University of Cologne (2007).Google Scholar
Odean, T.“Volume, Volatility, Price, and Profit When All Traders Are above Average.” Journal of Finance, 53 (1998), 1887–1934.Google Scholar
Ravina, E., and Sapienza, P.. “What Do Independent Directors Know? Evidence from Their Trading.” Review of Financial Studies, 23 (2010), 962–1003.Google Scholar
Riger, S., and Galligan, P.. “Women in Management: An Exploration of Competing Paradigms.” American Psychologist, 35 (1980), 902–910.CrossRefGoogle Scholar
Roulstone, D.“The Relation between Insider-Trading Restrictions and Executive Compensation.” Journal of Accounting Research, 41 (2003), 525–551.Google Scholar
Schubert, M. B.; Gysler, M.; and Brachinger, H. W.. “Financial Decision-Making: Are Women Really More Risk-Averse?” American Economic Review Papers and Proceedings, 89 (1999), 381–385.CrossRefGoogle Scholar
Seyhun, H. N.“Insiders’ Profits, Cost of Trading, and Market Efficiency.” Journal of Financial Economics, 16 (1986), 189–212.Google Scholar
Seyhun, H. N.“The Effectiveness of the Insider Trading Sanctions.” Journal of Law and Economics, 35 (1992), 149–182.Google Scholar
Seyhun, H. N. Investment Intelligence from Insider Trading. Cambridge, MA: MIT Press (1998).Google Scholar
Soll, J., and Klayman, J.. “Overconfidence in Interval Estimates.” Journal of Experimental Psychology: Learning, Memory, and Cognition, 30 (2004), 299–314.Google Scholar
Sundén, A. E., and Surette, B. J.. “Gender Differences in the Allocation of Assets in Retirement Savings Plans.” American Economic Review Papers and Proceedings, 88 (1998), 207–211.Google Scholar
Wang, F. A.“Strategic Trading, Asymmetric Information and Heterogeneous Prior Beliefs.” Journal of Financial Markets, 1 (1998), 321–352.Google Scholar
Wang, F. A.“Overconfidence, Investor Sentiment, and Evolution.” Journal of Financial Intermediation, 10 (2001), 138–170.Google Scholar
Westphal, J. D., and Milton, L. P.. “How Experience and Network Ties Affect the Influence of Demographic Minorities on Corporate Boards.” Administrative Science Quarterly, 45 (2000), 366–398.Google Scholar
Yoder, J. D.“Rethinking Tokenism: Looking beyond Numbers.” Gender and Society, 5 (1991), 178–192.Google Scholar
Zimmer, L.“Tokenism and Women in the Workplace: The Limits of Gender-Neutral Theory.” Social Problems, 35 (1988), 64–77.Google Scholar