Are women more risk-averse than men? Some studies have shown that women in finance take fewer risks when picking stocks, investing in venture capital, and making acquisitions. But why? And is this the whole picture?
A simplistic explanation is that in primitive societies men were forced to compete for status and power whereas women were more likely to be caregivers. Others have suggested that men are just natural thrill-seekers in a way that women aren’t. The truth is likely to be more complex, and an increasing number of academic studies point to a more nuanced picture.[…]
Impact investing: a study into venture philanthropists’ behaviour
Interestingly, Dr Alemany had not actually set out to study how women invest. She wanted to understand the relationship between human capital and risk-taking in impact investing. “The surprising results about gender were something we had not anticipated,” she says. She had decided to observe impact investing as it is a setting that involves both financial investments and social implications. Venture philanthropy investors invest in social entrepreneurs who seek to address social problems while also pursuing financial sustainability or even profit.
To construct a dataset, Dr Alemany and her colleagues contacted all of the dedicated venture philanthropy funds in Europe, the US, Asia, and Australia – a total of 104 active firms. Fifty of these firms agreed to share their data with the researchers regarding their approach to investments, which allowed them to look closely at risk-taking behaviour.
To measure risk-taking orientation, the researchers adapted a well-known survey measure of risk from the academic literature on entrepreneurship, which captures elements such as whether the investor searches actively for new investment opportunities, makes bold decisions despite uncertain outcomes and regularly makes substantial changes in their product portfolio — or, on the other hand, if they make cautious investments, focusing on stability and steady growth, or fund stable, immature social enterprises.
For each of the social investment firms, they identified the composition of their investment teams, focusing on the top management team, which makes final decisions. They examined how many women were part of the top management team. Out of the 183 top managers working for the 50 investment firms, 70 (38%) were women. They then ran a regression analysis on the risk-taking orientation, the composition of the teams and some control variables.
‘Firms with a higher proportion of women in the top management team took significantly more risks in their investment decisions’
These regression models displayed a clear effect: impact investment firms with a higher proportion of women in the top management team took significantly more risks in their investment decisions. The average team in the sample (which has 1.7 female team members) scored 12 on their measure of investment risk, whereas an investment firm with 3 women on its team scored 14.6. A team without any women, by contrast, took risk to the score of 9.5. In other words, in this industry, teams with more women take significantly more risk than teams dominated by men[…]
Fuente: London Business School