Diversity in Financial Risk Management: Revisiting the Lehman Sisters Hypothesis

36 Pages Posted: 10 May 2017

See all articles by Elizabeth A. Sheedy

Elizabeth A. Sheedy

Macquarie University Department of Applied Finance; Financial Research Network (FIRN); Macquarie University, Macquarie Business School

Martin Lubojanski

Technische Universität München (TUM)

Date Written: March 2017

Abstract

This paper scrutinises the supposed benefits of diversity for financial risk management on the dimensions of gender and age. Using employee survey responses from ten large banks we find that females are no more likely than males to manage risk well after controlling for individual risk attitudes. We observe wide dispersion of risk tolerance for both genders in the banking workforce. Gender differences in risk tolerance are decreasing in seniority, suggesting that female managers are very similar (in this regard) to their male counterparts. In contrast, older workers report more desirable risk management behaviour than their younger peers even after controlling for risk tolerance, suggesting that the benefits of experience for risk management go beyond just individual risk attitudes. To better understand the formation of business unit culture we also investigate the relationship between risk culture and demographics at the business unit level. We find no association between gender/age distribution of business units and their risk culture, nor between the gender/age of business unit leaders and their unit’s risk culture.

Keywords: Risk management, gender, age, banking

JEL Classification: G21, G32, M14

Suggested Citation

Sheedy, Elizabeth A. and Lubojanski, Martin, Diversity in Financial Risk Management: Revisiting the Lehman Sisters Hypothesis (March 2017). Available at SSRN: https://ssrn.com/abstract=2965850 or http://dx.doi.org/10.2139/ssrn.2965850

Elizabeth A. Sheedy (Contact Author)

Macquarie University Department of Applied Finance ( email )

Room 739, 4 Eastern Road
Macquarie University
North Ryde, NSW 2109
Australia
61-2-9850 7755 (Phone)
61-2-9850 7281 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Martin Lubojanski

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

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