IN FLU EN CE O F G EN D ER

IN IN VESTM EN T
BEH AVIO R
Anju Ajaykumar Kavya Krishnan K

Vivek Sunny Charukesh M D

 IN TR O D U C TIO N

Around the world, the gender influence has dramatically increased the
concern of financial
In many research studies it has been found that 80-90% of female will
be responsible for their investment decisions.
But still , we can find there is an investing gap between the male and
female regarding the investment capabilities.
Studies found that females are more risk averse when compared to the
males.
More over the financial advisors are assuming that female prefer to
invest in less risky investment
 4 Journals

Behavioural Finance: A study of gender affects on investing decisions ,

Jenna Fish , Carlson School of Management, University of Minnesota, 2012.

An Empirical Study Of Gender Differences In Risk Aversion And

Overconfidence In Investment Decision Making, Dr. Monica Sharma, Dr.
Vani Vasakarla, IJAIEM , 2013

Difference in Gender Attitude in Investment Decision Making in India ,

Gaur Arti, Julee, Sukijha Sunita, Research Journal of Finance and Accounting,
2011
Team Gender Diversity and Investment Decision Making Behaviour , Vicki
L. Bogan, David R. Just, Chekitan S. Dev, Cornell University School of Hotel
Administration, The Scholarly Commons, 2013
BehaviouralFinance: A study of
gender aff
ects on investing
decisions
 Business student from Carlson School of Management, University of
Minnesota, Spring 2012
relationship between risk aversion and gender
what factors affect a persons risk aversion and whether or not risk
aversion is related to gender
common belief that females are more risk averse than males
According to Bruce (1995), 80-90% of females will be responsible for
their finances at some point in their lives
since the 1980s there have been many studies done that show females
take similar risks as males
study on college-aged students to provide some insight on what factors
affect risk aversion and whether or not it is truly gender-related
 common belief that females are more risk averse than males
According to Bruce (1995), 80-90% of females will be
responsible for their finances at some point in their lives
since the 1980s there have been many studies done that show
females take similar risks as males
study on college-aged students to provide some insight on what
factors affect risk aversion and whether or not it is truly gender-
related
 Author hypothesize that risk aversion is affected by financial knowledge,
financial experience, and wealth
When controlling for these factors, she expect that males and females will
exhibit similar levels of risk
According to past research, as financial knowledge and wealth increase, a
persons risk aversion decreases
Bem, Kogan, and Wallach (1962) conducted an experiment on how groups
affect or change an individuals risking-taking when making decisions
risky shift - when individuals are placed into a group and take greater risks
in decision-making than they previously would as individuals
 research was conducted on a group of undergraduate students in a
Principles of Finance course.
the students each had a Stock-Trak account, which allowed them to
simulate stock trading
Everyone started with a hypothetical $500,000
Each group consisted of three to four students divided by gender.
all male groups, all female groups, mixed gender groups.
Survey questions for individual analysis
 CO N CLU SIO N

All female groups were the most risk-averse

All male groups were more risk taking
Mixed groups were more risk averse than all male groups.
Students tend to take more risk as a group than as an individual-
risk becomes collective responsibility
 An Em piricalStudy O f G ender
D iff
erences In Risk Aversion And
O verconfi d ence In Investm ent D ecision
M aking
Introduction -

In BF, researchers have studied the gender differences

and their empowering impact on the investment
decision making of individual investors.
Gender effects on risk aversion and overconfidence in
investment decision making.
There is an investing gap between the male and female
regarding the investment capabilities.
 O verconfi
d ence

[Powell and Ansic1997].-Women tend to show a lower degree of confidence than

men
[Barber and Odean 2001].-One can say that the more a person trades the more
likely the individual is to be confident with financial decisions
Lenney [1977] -Gender differences in self-confidence depend on the lack of clear
and unambiguous feedback.
Lewellen, W. G et al [1977] men spend more time and money on security
analysis
[Graham et al 2002]. Women are more likely to avoid financial issues in general
Overconfidence is a characteristic found in both men and women; however,
women have a tendency to display less overconfidence about a financial
judgment than do men
Risk Aversion

Risk aversion is affected by financial knowledge, prior

financial experience, and wealth.
Meyers-Levy [1986] females are more comprehensive
information processors than males.
Hersch [1996] women exhibit greater risk aversion not
only in their financial investments but also in other
activities including such activities as smoking and seat
belt usage.
V. L. Bajtelsmit at el [1999] and Powell and Ansic [1997]
examined how gender affects asset allocation in
retirement pension accounts.
 R. Schubert, et al [1999]-women, under controlled economic
conditions, generally do not make less risky financial decisions.
Sunden [2004] -married women tend to take more risk in their
premium pension portfolios than unmarried woman.
[Graham et al 2002]. -Women with fewer tendencies toward
overconfidence in investment decisions usually display an increased
risk aversion compared with men
To sum up, it can be said that researchers over time have indicated
that significant differences occur in decision making depending on the
gender of the individual. There seems to be tendencies for women to
be less confident in their decisions and more risk averse than men
 D if f
e ren ce in G en d er A ttitu d e
in In vestm en t D ecision M akin g
in In d ia
O BJECTIVE

differences in the Investment Decision Making (IDM)

process between female and male investors.
chi-square test
200 samples- questionnaire
 H YPO TH ESIS

no significant difference
occupation
annual income
investment policy
taking advice or assistance in the investment
decision making
investment options
investment period
renewing the investments
CO N CLU SIO N

level of awareness more for males.

less confidence and lower satisfaction levels for
females.
Female more cautious especially if availability of funds
is low.
selection of investments emphasis on familiarity,
opinion and demographic measures both for female and
male investors.
Team G en d er D iversity an d
In vestm en t D ecision
M akin g B eh aviou r
 IN TRO D U CTIO N

Normative models of economic and investment behaviour treats all

decisions as individual ones (Shupp & Williams, 2008).
Group psychology often leads people to make different decisions
(Shefrin, 2007; Kerr et al.,1996) & the majority of larger funds are
managed by teams
The group decisions are affected by the defining characteristics of
the group.
Does team gender diversity leads to any measurable differences
with respect to portfolio choice decisions?
 LITERATU RE

Dufwenberg and Muren (2006) show that gender composition affects the
generosity of teams in the context of a dictator game
Prather and Middleton (2000) find that there is no appreciable difference between
the outcomes of team-managed and individually-managed mutual funds.
Analyzing a sample of management teams from the U.S. mutual fund industry,
Bar et al. (2007) conclude that gender diversity is negatively related to fund
performance while informational diversity is positively related to fund
performance.
More specifically, teams composed of heterogeneous industry tenure and
education backgrounds outperform teams with a more homogeneous
composition.
 Bar et al. (2007) also conclude that age diversity has no impact on returns
and that single-gender teams outperform mixed-gender teams.
Atkinson et al. (2003) compare fixed-income mutual funds and find that male-
and female managed funds do not differ significantly in terms of performance,
risk, or other fund characteristics.
Their results suggest that differences in investment behaviour often attributed
to gender may be related to investment knowledge and wealth constraints.
Niessen and Ruenzi (2007, 2009) find that female and male mutual fund
managers do not differ in average performance but female managers do
receive significantly lower inflows
Barber and Odean (2001) find that with respect to trading strategies, men are
more overconfident than women; trading stock as much as 45 percent more
than women
 Fehr-Duda et al. (2006) conclude that womens probability
weighting functions (used to weigh uncertain outputs in
gambles) are strongly susceptible to mood states while mens
are not.
Kumar (2010) finds that female equity analysts issue bolder and
more accurate forecasts and that stock market participants react
to this male-female skill difference.
Jianakoplos and Bernasek (1998) show that women are more risk
averse with respect to financial decisions.
key factors that have been previously shown to influence
investment decisions: risk aversion and loss aversion.
 question: Do gender diverse portfolio (mutual fund) management teams
make different decisions than homogeneous teams with respect to risk
aversion and loss aversion?
From Jianakoplos and Bernasek (1998) one could infer that female dominated
fund management teams would be more risk averse than male dominated
teams.
However, since teams have been shown to make different decisions than
individuals, it is not clear that risk seeking would be increasing with male
team member representation.
From Sutter (2007) we know that teams also are prone to myopic loss
aversion but the gender composition effect of the teams was not analysed.
 FIN D IN G S

Team composition does influence financial decisions with regard

to the assessment of risk and loss.
A male presence on a team can
increase the probability of selecting a higher risk investment
decrease the probability of choosing an investment that will require realizing
a larger loss.

Results are complementary to other research by Castillo et al.

(2012) who show that merely being in the same room with males
causes females to be more risk taking.
The risk seeking behaviour of a team is not necessarily increasing
with the number of males on the team.
 All male teams, while more risk seeking than all female
teams, are not the most risk seeking.
This non-monotonicity of risk seeking (and loss aversion) with
respect to the number of men on a team reinforces the
premise that team decisions are different from individual
decisions.
Better understanding the sources of these differences,
whether a mixed gender presence (Castillo et al., 2012) or a
gender influence, is a rich area for future research
IM PO RTAN T IM PLICATIO N S

Important implications for team investment decisions driven

by the assessment of risk and return trade-offs.
Wall Street, with a largely male workforce, could be driven to
take higher risks than a workforce which is more reflective of
the general population.
To curb excessive risk taking and loss aversion,
understanding the role of gender diversity in risk
management would be useful in effecting change
Thank you