Investor Preference for Director Characteristics: Portfolio Choice with Gender Bias

The Accounting Review (Forthcoming)

53 Pages Posted: 27 Jun 2013 Last revised: 30 Sep 2019

See all articles by Henry L. Friedman

Henry L. Friedman

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

Date Written: August 29, 2019

Abstract

This study examines whether investor-level preferences for director characteristics influence portfolio choices, using data on 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 and hold smaller stakes in firms with more female directors. Since variation in funds’ home-country gender biases are plausibly unrelated to the selection and performance of female directors in U.S. firms, the empirical strategy mitigates endogeneity concerns arising from estimates based on associations between market performance and gender demographics. The study contributes by linking investments to measured gender biases, and by providing evidence, through additional analysis, of potential channels through which gender bias may affect portfolio choice.

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 (August 29, 2019). The Accounting Review (Forthcoming), 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 )

D406 Anderson Complex
Los Angeles, CA 90095-1481
United States

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