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(THE CONVERSATION) The research summary is a brief overview of interesting scholarly work.
The big idea
Women’s perception of unethical behavior among finance professionals may contribute to their under-representation in the industry, according to a recently published article I co-authored with colleagues at the University of Zhejiang and Creighton University.
We administered surveys to nearly 3,000 college students in the United States and China, outlining 10 scenarios in which a character makes an ethically questionable decision. Students were asked to rate how ethical the action was and the percentage of investment managers they thought would act the same way.
By a statistically significant margin, women in the United States ranked character actions as more unethical than men. However, they were also more pessimistic about the ethics of financial professionals, assuming that a significantly higher percentage of investment managers would take the same action. In other words, women surveyed in the United States perceived a larger gap between their own ethical views and what they think of investment managers.
For example, in one scenario, a financial advisor offers a risky fund to an elderly client. It will potentially bring a better return for the client, but also a substantial commission for the advisor. Of the men in our sample, 38.8% believed that a relatively small number of finance professionals – less than 40% – would take this dubious action. In comparison, only 26.7% of women felt that a low number of finance professionals would take this action. Only 29.5% of men believe that a high percentage of finance professionals – over 60% – would recommend the risky portfolio, compared to 38.3% of women.
According to our surveys, however, women in China seem to have a more favorable perception of investment manager ethics than men, by a statistically significant margin.
These differences appear to reflect some differences in gender representation in the industry in the United States and China. In 2018, among current or future investment professionals taking the CFA exam in the United States, only 29% were women, while in China, 52% of candidates were women.
why is it important
Many reasons have been offered as to why women in the United States are less likely to pursue careers in finance, particularly in investment management, such as the lack of role models and cultural norms across the world. ‘industry.
Universities and professional organizations have been trying for many years to increase the number of women in finance professions. However, recent data suggests that the percentage of female fund managers has not improved over the past two decades. Only 18% of investment professionals who have earned the CFA designation in the United States are women.
This participation rate is significantly lower than that of other professions, since women represent 37% of active physicians, 38% of lawyers in law firms and 62% of accountants and auditors.
Researchers and women’s rights advocates have described a host of factors contributing to women’s slow advancement in many traditionally male-dominated fields, ranging from prejudice and discrimination to difficulty balancing work and care. children, to a preference for less competitive environments. Given women’s faster progress in other fields, however, we hope to isolate factors specifically associated with investment management to better understand the lack of progress.
What is not yet known
Our research suggests that the many institutions interested in recruiting more women into financial careers should devote efforts to addressing concerns about ethics and changing misperceptions of the field.
However, it is unclear where these ethical perceptions are formed and to what extent they reflect reality. For example, do women overestimate the occurrence of ethical misconduct or do men underestimate it? Can these perceptions be changed through ethics training or by highlighting the rigorous ethical standards employed by professional organizations such as the CFA Institute Code of Ethics – or are these views already entrenched by the time students arrive on university campuses?
Although designing the most effective reforms is a difficult road, we hope that understanding the differences in ethical perceptions will lead to more successful efforts in recruiting diverse pools of finance professionals in the future.
This article is republished from The Conversation under a Creative Commons license. Read the original article here: https://theconversation.com/how-to-reduce-investings-gender-gap-try-talking-about-ethics-173970.