Do Investors Discriminate Against Women?

Posted on February 1, 2011 by

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Investors and Gender Bias

Research from the University of Utah suggests that potential investors tend to believe that male-owned business ventures are more promising and stable than female-owned ventures. Test groups were presented with business plans that were identical, save for the gender of the CEO. BNET reports:

Respondents were asked to assess the company’s technology, growth prospects, strategy, potential for demand growth, level of risk involved, suggested amount of investment, and suggested CEO compensation, among other factors.

  • The recommended  investment in the startup, as a percentage of its equity, was almost three times higher for firms with male CEOs.
  • The students recommended that female CEOs, on average, be paid 86% of what a guy would get.
  • Strategic assessments of the firms’ prospects (positioning, risk, uniqueness) were more favorable when the CEO was male.
  • Top management teams led by female CEOs were seen as less likely to stay together during the startup’s early years, as less cohesive, and as having more internal conflict.
  • Both men and women evaluated people of their own sex more favorably, but this effect was stronger for men.
  • Men and women both discriminated against women CEOs, but men did so more strongly.

Why are people so skeptical of female leadership—and more importantly, how can women change the predominant bias against them? Facebook COO Sheryl Sandberg suggests that women in the workforce should try to affect change on an individual level by bearing responsibility for their career trajectory and maximizing their value. In her December 2010 TED lecture, “Why we have too few women leaders,” Sandberg has three basic points of advice for working women: (1) Sit at the table, (2) Make your partner a real partner, and (3) Don’t leave before you leave.  In her closing, Sandberg says, “I want my daughter to have the choice to not just succeed, but to be liked for her accomplishments.”

Watch her full lecture here:

[H/T: Amanda France]

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