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The impact of shifting societal attitudes toward women on capital markets and corporations: Evidence from the Harvey Weinstein scandal and the #MeToo movement
Full text linkWhy are there so few women in top leadership positions? One possible explanation is that the supply of qualified women is limited. Another is that conscious or unconscious biases lead to female candidates being overlooked for top roles. Of course, these two explanations could both be true, and work to reinforce one another: if female candidates are systematically passed over for top leadership positions, fewer women will pursue such opportunities, thereby further restricting future supply.
We contend that the absence or underrepresentation of women in leadership positions within some firms stems partly from a corporate culture that tolerates (and may even foster) sexism, preventing women from rising to the top—a phenomenon widely known as the “glass ceiling.” The renowned economist Marianne Bertrand (2018) has identified many factors that help explain the glass ceiling, but she highlights that there is an unexplained residual and that “sexism should be high on the list to name that residual” (p. 228).2 This notion is further supported by survey evidence. For example, analysis by the Rockefeller Foundation and Global Strategy Group (2017) indicates that the culture of the corporation itself, and particularly the so-called “boys club” attitude in the workplace, is one of the main hurdles preventing women from achieving top leadership positions.3 Research has also shown that having a woman in the firm's C-suite improves equality in the organization by narrowing the gender pay gap (Tate and Yang (2015), Kunze and Miller (2017), and Dong (2022)).4 Similarly, a World Economic Forum (2017) study on attitudes towards women in the workplace emphasizes the pivotal role of female leadership in building a culture of gender equality.5 In fact, it concludes that the key to closing the gender pay gap is to put more women in charge.
In our work, we provide compelling evidence on how shifts in societal attitudes toward women can influence capital markets and corporations, ultimately contributing to shattering the glass ceiling. In particular, we show that in the aftermath of the Harvey Weinstein scandal and the subsequent re-emergence of the #MeToo movement, corporations increased their gender diversity in the top echelons of management, even in traditionally male-dominated industries and in more sexist states. This change was partly driven by changes in investors’ non-monetary preferences leading to heightened investor demand for shares of less sexist firms. Importantly, the rise in executive gender diversity did not come at the expense of future profitability, which is consistent with sexism being a significant barrier preventing women from reaching the top echelons of corporations
Expected Losses, Unexpected Costs? Evidence from SME Credit Access under IFRS 9
Full text linkThis paper examines lending effects of European banks switching to an expected credit loss (ECL) model under IFRS 9. I find evidence that ECL transition deteriorates the credit landscape for SMEs—as risky, opaque, and bank-dependent borrowers. Post-ECL, affected banks reduced SME lending by over 10 percent, and these effects persisted during the most recent downturn during the COVID-19 pandemic. Banks’ financial reporting objectives and implementation difficulties seem to explain these findings. Additional tests at the borrower and loan-contract levels indicate rising loan rejection rates, interest spreads, and collateral requirements, as well as declining loan amounts, maturities, and subsequent capital investments, for SMEs that do business with affected banks
Data-Driven Investors
No full textHow does the increased use of data technologies, like machine learning, by financial intermediaries affect the allocation of capital towards innovation? I study this question in the context of startup financing by venture capitalists (VCs). While VCs adopting data technologies become better at screening startups similar to those in historical data, they tilt their investments towards this pool and become concurrently less likely to finance innovative startups that achieve rare major success. Plausibly exogenous variations in VCs’ screening automation suggest that these effects are causal. These findings highlight how investors’ adoption of data technologies can have real effects through innovation financing
Financial Advisors and Investors’ Bias
Full text linkWe study an intervention by a brokerage firm providing advisory services to high-net-worth investors. In 2018, the firm changed the information displayed on its internal platform, so that financial advisors could no longer observe which clients’ holdings were in paper gain or loss. Using data on portfolio stock transactions between 2016 and 2021, we show that, while all investors exhibit a significant disposition effect before 2018, that is, a greater propensity to realize gains than losses, highly advised investors see their bias significantly reduced afterward. Our paper shows financial firms can successfully reduce clients’ biases by appropriately manipulating advisors’ information
A growth mindset frame increases opting in to reading information about bias
Full text linkWe explore the conditions under which people will opt in to reading information about bias and stereotypes, a key precursor to the types of self-directed learning that diversity and anti-bias advocates increasingly endorse. Across 1 meta-analysis (total N = 1,122; 7 studies, 5 pre-registered) and 2 pre-registered experiments (total N = 1,717), we identify a condition under which people opt in to reading more about implicit bias and stereotypes. People randomly assigned to read a growth, rather than fixed, mindset frame about bias opted in to read more information about stereotypes and implicit bias (Study 1, Study 3). The mechanism that drove these effects was individuals’ construal of the task as a challenge (Studies 2-3). Our findings offer insight into how to promote voluntary engagement with information about stereotypes and biases. We discuss how this work advances the study of mindsets and diversity science
Historizing the present: Research agenda and implications for consumer behavior
Full text linkThis paper conceptualizes the phenomenon of historizing the present, defined as emphasizing the historical significance of present events and treating the present from the perspective of history. The authors identify four modes of historizing the present (emphasizing that: (1) the present will shape history; (2) the present is a unique moment in history; (3) the present will be remembered in history; (4) the present echoes history) and demonstrate how historizing can be employed by marketers of for‐profit and nonprofit organizations in a variety of contexts. The paper examines the psychological implications of appreciating the historical significance of the present and outlines a research agenda for studying the downstream behavioral consequences of historizing the present across diverse substantive consumer domains. It concludes with an examination of the broader societal implications of historizing the present as well as its implications for consumer well‐being
Advance selling to ease financial distress
Full text linkLeft unable to provide service during the COVID-19 pandemic, many small businesses have experimented with alternative ways of generating income. One approach that has gained traction is the use of advance selling, whereby the firm asks consumers in its local community to support the business by paying in advance for consumption at a future date. In this paper, we develop a game theoretic model to investigate whether and how advance selling schemes can be successfully implemented by firms facing financial distress. In cases of high distress (i.e., where obtaining bank financing is infeasible given the firm's financial need), we show that advance selling in its classic implementation can help the firm secure its survival in some scenarios, but may suffer from significant inefficiencies associated with strategic consumer behavior and firm moral hazard. We demonstrate that two modifications of the classic scheme currently observed in practice - namely, (i) the introduction of an "all-or-nothing" clause, and (ii) selling future discount coupons as opposed to the full service - can expand the set of scenarios in which survival is ensured, while also allowing the firm to extract higher profit. In cases of moderate financial distress (i.e., where bank financing is a feasible but inefficient option), we find that simple advance selling schemes typically fail to make an impact. However, we show that a more complex scheme, combining both of the aforementioned modifications simultaneously, can be used in conjunction with bank financing to generate a substantial improvement in firm profit
Frontiers: The Intended and Unintended Consequences of Privacy Regulation for Consumer Marketing
No full textAs businesses increasingly rely on granular consumer data, the public has increasingly pushed for enhanced regulation to protect consumers’ privacy. We provide a perspective based on the academic marketing literature that evaluates the various benefits and costs of existing and pending government regulations and corporate privacy policies. We make four key points. First, data-based personalized marketing is not automatically harmful. Second, consumers have heterogeneous privacy preferences, and privacy policies may unintentionally favor the preferences of the rich. Third, privacy regulations may stifle innovation by entrepreneurs who are more likely to cater to underserved, niche consumer segments. Fourth, privacy measures may favor large companies who have less need for third-party data and can afford compliance costs. We also discuss technology platforms’ recent proposals for privacy solutions that mitigate some of these harms, but, again, in a way that might disadvantage small firms and entrepreneurs
Market Power in Finance
Full text linkGrowing evidence points to declining competition across industries in the United States, including the financial sector. Such findings have reinvigorated research efforts to understand the ramifications of rising market power for financial markets. In this article, we survey some of these efforts by reviewing the evidence and outlining a simple model structure that we find useful in organizing and examining links between trends in the competitive environment and financial markets. The framework is highly tractable and endogenously links market concentration, markups, and demand elasticities. Indeed, we think that the structure could serve as a building block in models that can help rationalize and connect some of the empirical evidence we review, as well as flesh out further implications in future research