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Sex, Race and Finance

Paper Session

Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM

Loews Philadelphia, Commonwealth Hall A2
Hosted By: American Finance Association
  • Chair: Renee Adams, University of New South Wales

When Harry Fired Sally: The Double Standard in Punishing Misconduct

Mark Egan
Harvard University
Gregor Matvos
University of Chicago
Amit Seru
University of Chicago


We examine gender discrimination in the financial advisory industry. We study a less salient
mechanism for discrimination, firm discipline following missteps. There are substantial differences in the punishment of misconduct across genders. Although both female and male
advisers are disciplined for misconduct, female advisers are punished more severely. Following
an incidence of misconduct, female advisers are 20% more likely to lose their jobs and 30% less
likely to find new jobs relative to male advisers. Females face harsher punishment despite
engaging in less costly misconduct and despite a lower propensity towards repeat offenses.
Relative to women, men are three times as likely to engage in misconduct, are twice as likely to be repeat offenders, and engage in misconduct that is 20% costlier. Evidence suggests that the observed behavior is not driven by productivity differences across advisers. Rather, we find supporting evidence for taste-based discrimination. For females, a disproportionate share of misconduct complaints is initiated by the firm, instead of customers or regulators. Moreover, there is significant heterogeneity among firms. Firms with a greater percentage of male executives/owners at a given branch tend to punish female advisers more severely following
misconduct and also tend to hire fewer female advisers with past record of misconduct.

Cultural Diversity on Wall Street: Evidence From Sell-side Analysts’ Forecasts

Kenneth Merkley
Cornell University
Roni Michaely
Cornell University
Joseph Pacelli
Indiana University


We study cultural diversity on Wall Street using information about sell side analysts’ cultural backgrounds. We find evidence consistent with higher levels of cultural diversity improving the accuracy of analysts’ consensus forecasts, and reducing optimism bias and dispersion. The positive effects of diversity on consensus forecast accuracy are more pronounced when firms have more opaque information environments, but also exhibit declining returns to scale. These results are robust to controlling for other dimensions of diversity (i.e., gender and educational diversity). Further, using exogenous shocks to analyst coverage resulting from brokerage house mergers, we find that drops in analyst coverage that reduce cultural diversity have a more significant impact on forecast accuracy. In additional analyses, we explore conference calls as one plausible mechanism for diversity to improve information flows, and find that cultural diversity is associated with more interaction on conference calls (as evidenced by analysts raising more questions on calls). Overall, our findings offer important insights on the effects of diversity between competitive agents.

Color and Credit: Race, Regulation, and the Quality of Financial Services

Taylor Begley
Washington University-St. Louis
Amiyatosh Purnanandam
University of Michigan


The incidence of mis-selling, fraud, and poor customer service by retail banks is
signicantly higher in markets with lower income and educational attainment. Further,
areas with a higher share of minority population experience signicantly worse outcomes
even after controlling for factors such as income, education, and house price changes.
Regulations aimed at improving access to credit to such areas are partly responsible
for these ndings. Specically, low-to-moderate-income (LMI) areas targeted by the
Community Reinvestment Act have signicantly worse outcomes and this eect is
magnied further for LMI areas with high-minority population. The results highlight
an unintended adverse consequence of such quantity-focused regulations on the quality
of credit to poor and minority customers.

Gender Representation in Economics Across Topics and Time: Evidence From the NBER Summer Institute

Anusha Chari
University of North Carolina-Chapel Hill
Paul Goldsmith-Pinkham
Federal Reserve Bank of New York


We document the representation of female economists at the NBER Summer Institute from 2001-2016. Over the period from 2013-2016, women made up 20.6% of all authors on scheduled papers. However, there is large dispersion across different sub-disciplines, where the share of female economists ranges from 7.3% to 47.7% across program sub-groups. While the average share of women authors on programs rises slightly over the past 16 years from 18% in 2001-2004, the gap in the representation of women between finance, macroeconomics and microeconomics subfields remains constant -- women make up only 14% of authors in finance and 25% of authors in microeconomics. We examine three channels potentially affecting female representation. First, using anonymized data on submissions, we show that the acceptance rate for women is statistically indistinguishable to that of men. Second, we find that the share of female authors is comparable to the share of women amongst all tenure-track professors, but is ten percentage points lower than the share of female assistant professors. Finally, within program, we find that when a woman is organizing the program, the share of female papers is higher.
Paola Sapienza
Northwestern University
Mariassunta Giannetti
Stockholm School of Economics
Manju Puri
Duke University
Shulamit Kahn
Boston University
JEL Classifications
  • G0 - General