Racial Concordance in the Market for Financial Advice

The Review of Corporate Finance Studies

46 Pages Posted: 12 Jan 2023 Last revised: 28 Feb 2023

See all articles by Christopher P. Clifford

Christopher P. Clifford

University of Kentucky

William Christopher Gerken

University of Kentucky - Finance

Tian Qiu

University of Alabama - Department of Economics, Finance and Legal Studies

Date Written: January 12, 2023

Abstract

We examine the role of race and racial concordance between financial advisors and their local community. We document significant differences in stock market participation based on community racial composition as well as differences in the characteristics of communities served by minority advisors. Notably, minority advisors are more likely to serve racially concordant communities, which tend to be poorer. We find that racial concordance has only a modest relation with local stock market participation. However, while minority advisors are more likely to drop out of the industry, this relation is mitigated among advisors located in more concordant communities.

Keywords: Stock Market Participation, Financial Advisors, Race, Concordance

JEL Classification: G20, G50, D14, J15

Suggested Citation

Clifford, Christopher P. and Gerken, William Christopher and Qiu, Tian, Racial Concordance in the Market for Financial Advice (January 12, 2023). The Review of Corporate Finance Studies, Available at SSRN: https://ssrn.com/abstract=4323223 or http://dx.doi.org/10.2139/ssrn.4323223

Christopher P. Clifford

University of Kentucky ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States
859-257-3850 (Phone)

William Christopher Gerken (Contact Author)

University of Kentucky - Finance ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

HOME PAGE: http://www.willgerken.com

Tian Qiu

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

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