Do Women Lag Behind Men? A Matched-Sample Analysis of the Dynamics of Gender Gaps

44 Pages Posted: 24 May 2016

See all articles by Joseph B. Farhat

Joseph B. Farhat

Central Connecticut State University - Department of Finance

Naranchimeg Mijid

Connecticut Center for Innovative Entrepreneurs

Date Written: May 21, 2016

Abstract

Previous studies found mixed answers whether women-owned firms are less successful than men-owned firms. Women entrepreneurs may lag behind men because they tend to have less human capital, they may have different personal preferences toward their businesses, and they tend to choose highly competitive services and retail sectors. This comprehensive study builds upon previous researches to examine gender gaps in survival, business outcomes, growth rates and financial capital injections. We used a matched sample of 430 pairs of a woman-owned and a man-owned firms with the same human capital (measured by age, education, experience, and race), the same preferences (measured by weekly hours worked and whether they have home-based business or not) and in the same industrial clusters (high-tech, medium-tech, and non-tech). We used a confidential version of Kauffman Firm Survey, eight years of panel data of new firms that started in 2004. We found that a woman–owned firms have the same survival rate as a man-owned firms. Women start their firms with smaller assets and fewer employees and generate lower sales but earn same profit as men. Despite this fact, their growth rates of total assets, sales, profits and employment are same as their male-owned counterparts. We found no gender gaps in debt capital injection ratios. However, we found women use more equity capital and less trade finance as a percentage of total financing than men. Our findings suggest that women do not lag behind men but they manage a smaller firms. Our analysis of the size gap indicates that about half of the size gap is explained by differences in industry and the remaining half is unexplained, which needs to be explored more in detail in the future.

Keywords: Matched Sample Method, Gender Gaps, Business Performance, Growth, Survival Rates, Financing

JEL Classification: J16, L25, L26

Suggested Citation

Farhat, Joseph and Mijid, Naranchimeg, Do Women Lag Behind Men? A Matched-Sample Analysis of the Dynamics of Gender Gaps (May 21, 2016). Available at SSRN: https://ssrn.com/abstract=2782773 or http://dx.doi.org/10.2139/ssrn.2782773

Joseph Farhat (Contact Author)

Central Connecticut State University - Department of Finance ( email )

1615 Stanley Street
New Britian, CT 06050
United States

Naranchimeg Mijid

Connecticut Center for Innovative Entrepreneurs ( email )

185 Main St. Suite 403
New Britain, CT 06051
United States
860-328-2954 (Phone)

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