MUELLER: Women, Wall Street and financial crises

Back to TopCommentsE-mailPrintBookmark and Share

Although women now make up 60 percent of the work force, they occupy only 20 percent of executive positions. There are even fewer in finance, especially the high-risk areas like hedge funds.

This may be one important reason we are in our economic chaos. Women were not a significant part of the investment decision-making process. If they had been, females could have added their complementary decision-making skills to males to create more balanced decisions that could lessen or prevent financial disasters.

This is why: He says “go”; she says “no.” In other words, on average, men are more willing to take risks than women. A large body of work supports this point of view. For example, in 1997, two researchers from Great Britain’s The University of Leeds School of Business & Economic Studies showed that males are more risk-seeking than females irrespective of familiarity and framing, costs or ambiguity. In 2008, two Cambridge University researchers demonstrated that high testosterone may be responsible for risk-taking when trading stock options. One of the Cambridge authors followed this up in the April 15, 2008, Financial Times asking, “Would a greater presence of women and older men in the market help stabilize them?”

If the sexes were to work together, male risk-taking tendencies would be balanced by female caution. This should lead to better financial results. If a stock loses 50 percent of its value, it decreases from $100 per share to $50, but to return to 100, it has to gain 100 percent of its value.

This is where women managers would be expected to shine—by diminishing the chance the stock would significantly drop in the first place. In other words, though the highs might be less dramatic with women cooperatively in charge with men, they also would be attenuated on the low side. Michel Ferray, a professor of management at Ceram Business School in France, has research that supports this concept. He showed that firms with a greater ratio of women in management fared better in share price during the current financial crisis than companies with fewer females.

Other evidence also suggests that, when males and females make investment decisions together, it strengthens the result. E. Brooke Harrington wrote in “Pop Finance: Investment Clubs and the New Investor Populism” in 2008 that mixed investment clubs make more money than those that are single-sex. Some German researchers demonstrated in 2007 that in a professional setting, female managers are more risk-averse and less extreme plus more consistent than male managers. They still glean the same risk-adjusted return. University of Michigan scholars showed in 2001 that diverse rather than homogenous groups are better at problem solving.

Scientific research shows us that diversification works in our investment portfolios. In spite of this, it hasn’t been practiced in investment management, either professional or personal. Both are dominated by males. It is possible that Wall Street would do better by making its strategy teams gender-neutral by adding more female investment specialists. The interaction of one sex with the other could lead to stronger investment decisions that could help lessen financial disasters and mean more money and less pain for all.•


Mueller is a neurologist, psychiatrist and former tenured associate professor at Indiana University. Now she is CEO of MyMoneyMD LLC, a local investment guidance firm.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

  2. I sure hope so and would gladly join a law suit against them. They flat out rob people and their little punk scam artist telephone losers actually enjoy it. I would love to run into one of them some day!!

  3. Biggest scam ever!! Took 307 out of my bank ac count. Never received a single call! They prey on new small business and flat out rob them! Do not sign up with these thieves. I filed a complaint with the ftc. I suggest doing the same ic they robbed you too.

  4. Woohoo! We're #200!!! Absolutely disgusting. Bring on the congestion. Indianapolis NEEDS it.

  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?