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Skirting the Issues? Experimental Evidence of Gender Bias in IPO Prospectus Evaluations

43 Pages Posted: 21 Feb 2010 Last revised: 2 Jul 2014

Lyda S. Bigelow

University of Utah - David Eccles School of Business

Leif Lundmark

University of Utah - Department of Management

Judi McLean Parks

Washington University in St. Louis - John M. Olin Business School

Robert Wuebker

University of Utah - David Eccles School of Business

Date Written: February 2012

Abstract

Given that women executives are present in the top management teams of IPO firms in increasing numbers, the lack of female-led IPO firms is a curious fact, especially since women-owned private businesses represent almost half of the new businesses formed in the United States, with patterns of founding similar to male-owned businesses. It hints at a potentially larger problem – a gender-based capital gap for new ventures. Given the empirical evidence suggesting a positive association between the presence of female executives and firm performance, we test whether investor perceptions are aligned with these empirical patterns. Using a sample of MBA students we construct a simulated initial public offering (IPO) manipulating the gender demographics of the top management team. Our results suggest that female CEOs may be disproportionately disadvantaged in their ability to attract growth capital when all other factors are controlled. Despite identical personal qualifications and firm financials, firms led by females were seen as having a poorer strategic position than those led by males, female Founder/CEOs were perceived as less capable then their male counterparts, and IPOs led by female Founder/CEOs were considered less attractive investments.

Keywords: Entrepreneurship, Top Management Teams, IPO, Gender Bias, Behavioral Finance

JEL Classification: M13, C91, G11, G24

Suggested Citation

Bigelow, Lyda S. and Lundmark, Leif and McLean Parks, Judi and Wuebker, Robert, Skirting the Issues? Experimental Evidence of Gender Bias in IPO Prospectus Evaluations (February 2012). Available at SSRN: https://ssrn.com/abstract=1556449 or http://dx.doi.org/10.2139/ssrn.1556449

Lyda Bigelow

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
801-585-3471 (Phone)

Leif Lundmark

University of Utah - Department of Management ( email )

Salt Lake City, UT 84112
United States

Judi McLean Parks

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-7451 (Phone)
314-935-6359 (Fax)

HOME PAGE: http://www.olin.wustl.edu/faculty/mcleanparks/

Robert Wuebker (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 East Campus Circle Drive
Salt Lake City, UT 84112-9304
United States

HOME PAGE: http://about.me/rwuebker

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