Academic

Understanding the Difference Between Men and Women (in Corporate Law)

By JA Hodnicki

Posted by D. Daniel Sokol

I am in the office working on an article as we are officially off today at the University of Florida for Labor Day.  This semester I am teaching corporate law and have a gender breakdown that is around 60 percent female.  This is quite unusual overall and particularly so when compared to male/female ratios in business schools.

I have been concerned with the gender gap and its effects for quite some time.  I have tracked it in antitrust and discussed it in the corporate context regarding gender and corporate boards.  I just came across an interesting recently published article by a Chicago/Northwestern b-school team that provides at least a partial explanation of why there are fewer women than men in finance.  I do not want to draw too broad a set of inferences but I think that this might have some explanatory value in business law and corporate governance as well.   The article's title gives you a sense of what it concludes - Gender differences in financial risk aversion and career choices are affected by testosteron.  The article is authored by Paola Sapienza,Luigi Zingales and Dario Maestripieri. 

ABSTRACT: Women are generally more risk averse than men. We investigated whether between- and within-gender variation in financial risk aversion was accounted for by variation in salivary concentrations of testosterone and in markers of prenatal testosterone exposure in a sample of >500 MBA students. Higher levels of circulating testosterone were associated with lower risk aversion among women, but not among men. At comparably low concentrations of salivary testosterone, however, the gender difference in risk aversion disappeared, suggesting that testosterone has nonlinear effects on risk aversion regardless of gender. A similar relationship between risk aversion and testosterone was also found using markers of prenatal testosterone exposure. Finally, both testosterone levels and risk aversion predicted career choices after graduation: Individuals high in testosterone and low in risk aversion were more likely to choose risky careers in finance. These results suggest that testosterone has both organizational and activational effects on risk-sensitive financial decisions and long-term career choices.

Full post as published by The Faculty Lounge on September 07, 2009 (boomark / email).