Scandinavian Working Papers in Economics

UiS Working Papers in Economics and Finance,
University of Stavanger

No 2025/2: Gender and Risky Investment: Do Markets Reflect or Alleviate Gender Stereotypes in Leadership?

Lata Gangadharan (), Jean Paul Rabanal (), Eko Riyanto (), Olga Rud () and Bernt Arne Ødegaard ()
Additional contact information
Lata Gangadharan: Monash Univ
Jean Paul Rabanal: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway
Eko Riyanto: Nanyang Technological University;
Olga Rud: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway
Bernt Arne Ødegaard: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway

Abstract: We examine whether shareholders' responses to risky investment decisions are influenced by the gender of the firm's manager, particularly when these decisions directly affect the fundamental value per share. Our findings indicate that male and female managers make similar investment choices, that shareholder beliefs about the managers' choices are generally accurate, and that market prices do not differ by manager gender. These findings suggest that gender diversity in leadership does not negatively affect shareholder valuation. However, when subjects are explicitly asked to compare the investment of male and female managers, strong gender stereotypes emerge, and most expect male managers to take on more risk. A similar bias is evident in share price comparisons, with male-led firms slightly favored, although the effect is weaker than that observed in the beliefs about investment decisions. This pattern suggests that, while individual judgments may be biased, market mechanisms can partially alleviate such biases.

Keywords: Gender; Risk Aversion; Corporate decisions; Experimental Finance

JEL-codes: C90; D81; G11; G35; G41; G51

Language: English

41 pages, July 13, 2025

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