What are the gender differences in the perception of risk?
In General there are various gender differences in the perception of risk. It does not only apply to the financial domain, but also in the perception of technology and environmental degradation (Eckel and Gr. These variances can be linked to five diffent domains: gambling, recreation, social domain and any other financial activities that is associated with high pay outs.
Femininty and masculinity play a huge role into the financial decision making. Femininty elimates the risk to take financial decision, while the masculinity encourages the risks at any shape or form. More recent study of Meier-Pesti along side with Penz, have come to an conclusion that risk taking are based on various level of form with masculine characteristics.
The biological relationship between both genders and company performance is a new area of study. They research the connection between CEO gender and company performance have found out companies with female CEO’s have a high percentage of performance increase compared to companied led by Male CEO’s. Krishnan and Parsons have revealed that companies with high proportion of gender diversity in CEO and senior management are significantly anticipating high earnings quality. Their findings have also discovered companies with Female in boards and executives are more profitable and have higher stock returns after IPOs. In addition, Erhardt, Werbel, and Shrader, research 127 US companies and have identified companies high proportion of female CEO tend to have a higher profitability, paralleled with average sector.
Many Scholars have proposed a potential explanation for the negative association between gender diversity at the board level and companies performance, which is the glass cliff effect: “women may be appointed as directors or CEO at the time of the companies lowest point. As a consequence, this would mean corporate performance have an influence on the proportion of women on board.
Further, Adams and Ferreira have shed light in regards to female being under represented in executive committees but not in the audit committees. The authors have also discovered from their finding that female directors are firmer than the male colleagues. They like to a have firm control over their leadership.