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Are Female Executives More Risk-Averse than Male Executives?

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  • Zahid Iqbal
  • Sewon O
  • H. Baek
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    Abstract

    It is often argued that women are more risk averse than men. This paper provides additional evidence on this issue by examining the stock selling behavior of male and female executives in response to stock option awards. When corporate executives sell shares of their firm upon new stock option awards, it is an indication that they are attempting to reduce risk through diversification of their personal portfolio. More rigorous stock sales by female executives would indicate that they are more risk averse than their male counterparts. However, this paper finds that male executives are more risk averse by engaging in higher diversification-related stock sales than the female executives. It is also found that the stock sales by male executives approximate the optimal hedge ratio. Copyright International Atlantic Economic Society 2006

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    File URL: http://hdl.handle.net/10.1007/s11293-006-6123-9
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    Bibliographic Info

    Article provided by International Atlantic Economic Society in its journal Atlantic Economic Journal.

    Volume (Year): 34 (2006)
    Issue (Month): 1 (March)
    Pages: 63-74

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    Handle: RePEc:kap:atlecj:v:34:y:2006:i:1:p:63-74

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    Keywords: G34; G39;

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    1. Sexton, Donald L. & Bowman-Upton, Nancy, 1990. "Female and male entrepreneurs: Psychological characteristics and their role in gender-related discrimination," Journal of Business Venturing, Elsevier, vol. 5(1), pages 29-36, January.
    2. Lewellen, Wilbur G & Lease, Ronald C & Schlarbaum, Gary G, 1977. "Patterns of Investment Strategy and Behavior among Individual Investors," The Journal of Business, University of Chicago Press, vol. 50(3), pages 296-333, July.
    3. Sunden, Annika E & Surette, Brian J, 1998. "Gender Differences in the Allocation of Assets in Retirement Savings Plans," American Economic Review, American Economic Association, vol. 88(2), pages 207-11, May.
    4. Brad M. Barber & Terrance Odean, 2000. "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors," Journal of Finance, American Finance Association, vol. 55(2), pages 773-806, 04.
    5. Eli Ofek & David Yermack, 2000. "Taking Stock: Equity-Based Compensation and the Evolution of Managerial Ownership," Journal of Finance, American Finance Association, vol. 55(3), pages 1367-1384, 06.
    6. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-30, October.
    7. Pacula, Rosalie Liccardo, 1997. "Women and Substance Use: Are Women Less Susceptible to Addiction?," American Economic Review, American Economic Association, vol. 87(2), pages 454-59, May.
    8. Stanley M. Atkinson & Samantha Boyce Baird & Melissa B. Frye, 2003. "Do Female Mutual Fund Managers Manage Differently?," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 26(1), pages 1-18.
    9. Renate Schubert, 1999. "Financial Decision-Making: Are Women Really More Risk-Averse?," American Economic Review, American Economic Association, vol. 89(2), pages 381-385, May.
    10. Bajtelsmit, Vickie L. & Bernasek, Alexandra & Jianakoplos, Nancy A., 1999. "Gender differences in defined contribution pension decisions," Financial Services Review, Elsevier, vol. 8(1), pages 1-10.
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    Cited by:
    1. Cheng, Louis T.W. & Chan, Ricky Y.K. & Leung, T.Y., 2010. "Management demography and corporate performance: Evidence from China," International Business Review, Elsevier, vol. 19(3), pages 261-275, June.
    2. Muravyev, Alexander & Talavera, Oleksandr & Bilyk, Olga & Grechaniuk, Bogdana, 2009. "Firm Performance and Managerial Turnover: The Case of Ukraine," IZA Discussion Papers 4372, Institute for the Study of Labor (IZA).

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