Investor Preference for Director Characteristics: Portfolio Choice with Gender Bias

58 Pages Posted: 27 Jun 2013 Last revised: 29 Sep 2017

Henry L. Friedman

University of California, Los Angeles (UCLA) - Accounting Area

Date Written: September 12, 2017

Abstract

This study examines whether investor-level preferences for director characteristics influence portfolio choices, using the U.S. holdings of non-U.S. funds. Consistent with bias-based preferences influencing portfolio allocations, funds from countries with greater gender inequality invest less in firms with more female directors. Variation in funds’ home-country gender biases are plausibly unrelated to the selection and performance of female directors in U.S. firms, mitigating endogeneity concerns arising from estimates based on associations between market performance and gender demographics. Additional results suggest that investors’ gender biases can influence firm valuations, the availability of fundamental information can mitigate the influence of bias on portfolio choice, and the results are not driven by pro-social gender biases.

Keywords: Investor taste; Director characteristics; Gender bias; Portfolio Choice; Foreign funds

JEL Classification: G11, J16, M10

Suggested Citation

Friedman, Henry L., Investor Preference for Director Characteristics: Portfolio Choice with Gender Bias (September 12, 2017). Available at SSRN: https://ssrn.com/abstract=2285815 or http://dx.doi.org/10.2139/ssrn.2285815

Henry L. Friedman (Contact Author)

University of California, Los Angeles (UCLA) - Accounting Area ( email )

D416 Anderson Complex
Los Angeles, CA 90095-1481
United States

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