HE SAYS, SHE SAYS: An Empirical Investigation of Conditional Bias against Female Securities Analysts

Abstract

Findings from gender psychology suggest that women face backlash in the maleoriented workplace for demonstrating elevated levels of competence, or for openly exhibiting male (“agentic”) traits. Additionally, when actual competence is difficult to ascertain, women less readily receive the benefit of the doubt. My goal is to analyze these various psychological phenomena and study how they may lead to bias against women in the securities research field. Using empirical data on analysts’ earnings forecasts from 1994 to 2005, I investigate how job outcomes vary with gender, conditional on an analyst’s forecast accuracy (competence) and extent of herding behavior (boldness). In line with evidence from psychology, I find that poor-performing and bold female analysts face bias in the labor market. Consistent with these heightened career concerns, I find that female analysts herd more overall. Interestingly, there is weak evidence that female analysts are rewarded more for issuing very accurate forecasts.