Sex matters: Gender bias in the mutual fund industry

We document significantly lower inflows in female-managed funds than in male-managed funds. This result is obtained with field data and with data from a laboratory experiment. We find no gender differences in performance. Thus, rational statistical discrimination is unlikely to explain the fund flow effect. We conduct an implicit association test and find that subjects with stronger gender bias according to this test invest significantly less in female-managed funds. Our results suggest that gender bias affects investment decisions and thus offer a new potential explanation for the low fraction of women in the mutual fund industry. The internet appendix is available at https://doi.org/10.1287/mnsc.2017.2939 . This paper was accepted by Lauren Cohen, finance. </jats:p

The gender pension gap in Germany

In this short study, we quantify the gender pension gap in Germany and examine how much more women would have to save for retirement to close it. The gender pension gap is first computed as an average across all employees and then split up into various age cohorts and occupations. Based on a broad database on wage income obtained from the Institute of Employment Research (IAB), to which all German businesses have to report, we estimate each employee’s statutory pension entitlements and find that the gender pension gap in Germany amounts on average to 26 %. While we do not observe a significant gender pension gap for employees below 35 years of age, the gender pension gap gets larger for older age cohorts. We argue that the decision to start a family is the most likely explanation for this pattern. As female labor force participation reduces drastically after giving birth, and never fully recuperates, labor income decreases and so do stat-utory pension entitlements of women. The gender pension gap is lower, and sometimes even negative for occupations where salaries are heavily regulated (for example, municipal clerks) and for occupations that are predominantly performed by women (for example, child care workers). It increases for occupations where sala-ries depend more on employees’ negotiation skills. We also compute how the gender pension gap can be closed, i.e., how much more women would have to save to make sure that they have the same pension payments (supplemented by their savings) than men upon retirement. We find that in most cases, the additional savings amount needed makes only up for a small fraction of women’s annual income, ranging between 1-2% for most age groups and occupations

The long-lasting effects of experiencing communism on financial risk-taking

We analyze the long-term effects of living under communism and its political propaganda in East Germany (former GDR) for financial risk-taking. Utilizing comprehensive German brokerage data, we show that, decades after reunification, East Germans still invest significantly less in the stock market. Consistent with communist friends-and-foes propaganda, they are more likely to hold stocks of companies in communist countries (China, Russia, Vietnam), and are particularly unlikely to invest in American companies or the financial industry. Effects are stronger for individuals for whom we expect stronger emotional priming, for example those living in communist “showcase cities” or cities of Olympic gold medalists. In contrast, East Germans with negative experiences invest more in the stock market today, e. g., those experiencing environmental pollution and suppression of religious beliefs and those without access to (Western) TV entertainment. Election years appear to have trigger effects inducing East Germans to reduce their stock-market investment further. We also provide evidence of negative welfare consequences, as indicated by investment in more expensive actively managed funds, less diversified portfolios, and lower risk-adjusted returns

Local bankruptcy and geographic contagion in the bank loan market

This paper examines whether corporate bankruptcies influence the bank loan characteristics of geographically proximate firms. We find that, controlling for industry contagion and local economic conditions, firms headquartered near a bankruptcy event experience a 7 basis point increase in loan spreads over the subsequent year, even when the credit default risks of local firms do not increase. There is also an increase in the proportion of secured loans among non-filing local firms. Local bankruptcy has a stronger impact among lenders with geographically concentrated loan portfolios, but even lenders with low exposure to the local economy increase their spreads. The adverse effects of bankruptcy weaken as borrowers' distance to bankrupt firms increases. Collectively, these results suggest that lenders are sensitive to local bankruptcies and induce geographic contagion in the bank loan market

As California goes, so goes the nation? The impact of board gender quotas on firm performance and the director labor market

On September 30, 2018, California became the first U.S. state to introduce a mandatory board gender quota applicable to all firms headquartered in the state. Using a large sample of publicly-listed firms headquartered in the U.S., we find that the introduction of the quota is associated with significantly negative announcement returns to California-headquartered firms. Consistent with the quota imposing frictions, this effect is larger for firms requiring more female directors to comply with the quota. There is also evidence of spillover effects to non-California-headquartered firms. We find evidence in support of two channels through which these spillover effects operate: First, we find spillover effects to be larger for firms operating in industries in which California-headquartered firms lack more female directors to comply with the quota, suggesting that non-California-headquartered firms may lose valuable female directors to California-headquartered firms. Second, we document negative spillover effects for firms headquartered in states dominated by the Democratic Party, consistent with the idea that these firms are more likely to become subject to a board gender quota as well. Finally, we show that, already as of month-end November, female representation on the boards of California-headquartered firms increased. Newly appointed female directors differ significantly in terms of age, independence, and experience from incumbent and leaving female and male directors