Is there a gender trade off in the finance sector?

Louis Labonne, Baptiste Léonard de Juvigny and Angèle Dennebouy, three financial track students at ESSEC Business School, share the findings of an ongoing research project into gender prejudice in the finance sector. 

The research project

Now in its second year and supervised by ESSEC Professors François Longin and Estefania Santacreu-Vasut, the ‘Gender and finance’ project is carried out within the framework of a 6-month ESSEC project experience for 1st-year finance students aimed at studying the importance of gender in individuals’ financial decisions.

The overriding objective of the project is to highlight students’ prejudice, or absence of prejudice, in terms of gender in their financial decisions. For that, the student research team leads their student sample populations to interact with software called SimTrade, developed by Prof. Longin, which simulates a day of trading on the financial market. Students’ reactions – buying or selling shares – are observed and noted, a crucial moment of analysis in the software being the nomination of a new CEO – randomly male or female – to the head of one of the companies involved in the trading simulation. The simulations, which take place over a dozen or so sessions, are carried out in the controlled environment of the Data Lab at ESSEC enabling the research team to analyse a total of 168 students.

For Louis Labonne and his fellow researchers, Angèle Dennebouy and Baptiste Léonard de Juvigny, the motivation to work on the issue was initially born from a wish to undertake research, particularly in economics. The six-month project was a great opportunity to gain a first experience in this field. ‘The fact of analysing our fellow students’ gender prejudice in their first year of studies gave the project a very tangible and interesting objective,’ states Louis Labonne.

The project was launched two years ago as a result of a simple observation: whereas female and male students were equally as successful in their finance studies at ESSEC – with even slightly higher grades shown by female students – three years later twice as many males than females were seen to be working in the finance sector after their graduation from ESSEC. Indeed, it is generally acknowledged that the finance sector is largely masculine in nature. If we want to change that – in the name of gender equality, states Louis Labonne – it all starts among business school students who will work in the sector as tomorrow’s leaders.

The results

Despite the fact that France is one of those countries having taken the lead in gender equality, the Gender in Finance experiment shows that there is still prejudice in relation to gender among students entering higher studies. Without going into the details, asserts Labonne, we observe that there is still an aversion to the opposite sex among our student samples. This manifests itself during the experiment by the fact that male students sell their shares when a female CEO is nominated, and that female students sell when a male CEO is nominated. What is different from the previous year of analysis is that fresh results demonstrate that this prejudice is stronger for a nominated female CEO.

The challenge

The key issue is that the experiment demonstrates an inherent prejudice among first-year students of taking the nomination of a female CEO as bad news for the company. However, the main difference between current results and those from the previous year is that this prejudice is no longer present in students’ actual speech. Today, it can hardly be imagined that anyone could affirm that a female CEO is bad for a company. But, despite such nominations as Christine Lagarde at the head of the IMF, this idea is indeed still present in an unconscious way. This points to a general need to combat this type of prejudice upstream – from the family level to throughout schooling. This being said, progress has already been made in French society as a whole over the last few years of awareness. Concerning business school level studies, Louis Labonne believes that courses and lessons with a more sociological and history-oriented approach of the financial sector would enable students to take a salutary step back to gain perspective on the gender equality issue.

The project will continue next year with an intake of new students. Now that the existence of a gender prejudice has been highlighted for two consecutive years, the student research team sees the need to explain the reasons for this. This means going deeper into the experiment, testing the variables to a greater degree and widening the student sample on which to carry out analysis.

Useful links

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