Abstract
It is often argued that women are more risk averse than men. This paper provides additional evidence on this issue by examining the stock selling behavior of male and female executives in response to stock option awards. When corporate executives sell shares of their firm upon new stock option awards, it is an indication that they are attempting to reduce risk through diversification of their personal portfolio. More rigorous stock sales by female executives would indicate that they are more risk averse than their male counterparts. However, this paper finds that male executives are more risk averse by engaging in higher diversification-related stock sales than the female executives. It is also found that the stock sales by male executives approximate the optimal hedge ratio.
Similar content being viewed by others
References
Atkinson, Stanley M.; Baird, Samantha B.; Frye, Melissa B. “Do Female Mutual Fund Managers Manage Funds Differently?” Journal of Financial Research, 26, Spring 2003, pp. 1–18.
Bajtelsmit, Vickie L.; VanDerhei, J. A. “Risk Aversion and Retirement Income Adequacy,” in Positioning Pensions for the Twenty-first Century, M. S. Gordon, O. S. Mitchell, M. M. Twinney (eds.), Philadelphia: University of Pennsylvania, 1997, pp. 45–66.
Bajtelsmit, Vickie L.; Bernasek, Alexandra; Jianakoplos, Nancy A. “Gender Differences in Defined Contribution Pension Decisions,” Financial Services Review, 8, 1999, pp. 1–10.
Barber, Brad M.; Odean, Terrance. “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors,” Journal of Finance, 55, April 2000, pp. 773–806.
Bernasek, Alexandra; Shwiff, Stephanie. “Gender, Risk, and Retirement,” Journal of Economic Issues, 35, June 2001, pp. 345–56.
Bliss, Richard T.; Potter, Mark E. “Mutual Fund Managers: Does Gender Matter?” Journal of Business and Economic Studies, 8, Spring 2002, pp. 1–15.
Hersch, Joni. “Smoking, Seat Belts, and Other Risky Consumer Decisions: Differences by Gender and Race,” Managerial and Decision Economics, 17, September/October 1996, pp. 471–81.
Jianakoplos, Nancy A.; Bernasek, Alexandra. “Are Women More Risk Averse?” Economic Inquiry, 36, October 1998, pp. 620–30.
Lewellen, Wilber G.; Lease, Ronald C.; Schlarbaum, Gary. “Patterns of Investment Strategy and Behavior Among Individual Investors,” Journal of Business, 50, July 1977, pp. 296–333.
Masters, Robert; Meier, Robert. “Sex Differences and Risk-Taking Propensity of Entrepreneurs,” Journal of Small Business Management, 26, January 1988, pp. 31–5.
Ofek, E.; Yermack, D. “Taking Stock: Equity-Based Compensation and the Evolution of Managerial Ownership,” Journal of Finance, 55, June 2000, pp. 1367–84.
Pacula, Rosalie L. “Women and Substance Use: Are Women Less Susceptible to Addiction?” The American Economic Review, 87, May 1997, pp. 454–9.
Powell, Melanie; Ansic, David. “Gender Differences in Risk Behavior in Financial Decision-Making: An Experimental Analysis,” Journal of Economic Psychology, 18, November 1997, pp. 605–29.
Schubert, Renate; Brown, Martin; Gysler, Matthias; Brachinger, Hans Wolfgang. “Financial Decision-Making: Are Women Really More Risk-Averse,” American Economic Review, 89, May 1999, pp. 381–5.
Sexton, Donald L.; Bowman-Upton, Nancy. “Female and Male Entrepreneurs: Psychological Characteristics and Their Role in Gender-Related Discrimination,” Journal of Business Venturing, 5, January 1990, pp. 29–37.
Sunden, Annika E.; Surette, Brian J. “Gender Differences in the Allocation of Assets in Retirement Savings Plans,” American Economic Review, 88, May 1998, pp. 207–11.