Stanford Study Reveals Gender Bias in Investment Industry
Stanford’s Graduate School of Business recently debuted a study co-authored by professor Amit Seru that reveals a nationwide gender bias when it comes to punishing women in the financial industry.
Entitled, “When Harry Fired Sally: The Double Standard in Punishing Misconduct,” Seru along with University of Chicago’s Gregor Matvos and University of Minnesota’s Mark L. Egan reviewed misconduct reports kept by FINRA between 2005 and 2015 on the 7 percent of certified investment advisers with misconduct records.
The trio found that male advisors, who make up 75 percent of financial advisors, engage in misconduct that is 20 percent more costly to settle and are “three times more likely than women to commit offenses.” According to the study, 1 in 11 male advisors have a misconduct record.
Despite these figures, Seru states plainly: “The evidence is consistent with [women advisers] being discriminated against because of some bias.”
“Female advisers who commit some form of misconduct—buying stocks for a client without permission—are 50 percent more likely to lose their job than a male adviser who breaks similar rules [and] 30 percent less likely than her male counterpart to find a new job within a year.” Female advisers also “face harsher punishment than men do, despite engaging in less costly misconduct and despite a lower propensity toward repeat offenses.”
Seru and crew examined every potential angle to see if a perception of women in the workplace as “less productive and therefore less costly to fire” contributed to the statistics. By and large, “women were found to be just as productive as men overall.”
The good news is that there’s a relatively straightforward fix to this pernicious gender bias, according to Seru: make the gender makeup of top management more evenly split.
“At firms that are owned exclusively by men or have no high-ranking female executives, female advisers are 42 percent more likely than their male counterparts to get sacked after committing some form of misconduct. But at firms where the mix of male and female top executives is closer to equal, men and women are disciplined at commensurate rates.”
About the Author
Jonathan Pfeffer
Jonathan Pfeffer joined the Clear Admit and MetroMBA teams in 2015 after spending several years as an arts/culture writer, editor, and radio producer. In addition to his role as contributing writer at MetroMBA and contributing editor at Clear Admit, he is co-founder and lead producer of the Clear Admit MBA Admissions Podcast. He holds a BA in Film/Video, Ethnomusicology, and Media Studies from Oberlin College.
