We examine firms that primarily target male or female consumers and find that female (male) households overweight female (male)-focused firms. Females’ investment returns slightly outperform men, but they significantly underperform when investing in female-focused firms. Females trade less than men, but their trading activity increases to match men in female-focused firms. We observe weaker, but similar patterns among institutional investors, indicating that even professional investors are influenced by gender-based preferences. Our findings support domain-specific overconfidence among female investors when investing in firms they are more familiar with and where they may perceive having expertise.
We document a novel cross-country relationship between gender bias, as portrayed in a country’s folklore, and firms’ corporate cash holdings, while controlling for firm characteristics, country-specific macroeconomic attributes, governance factors, and cultural differences. We show that firms tend to hold significantly less cash in countries with a more pronounced Male Bias, defined as men being portrayed as more violent, physically active, and independent. We provide evidence that these differences can be attributed to countries with a larger Male Bias exhibiting less patience, consistent with the precautionary motive for holding cash. Our findings highlight the value of utilizing folklore data to comprehensively capture the complex and nuanced effects of cultural dimensions on economic and financial behaviors.
12 min read
Publication, Finance, Gender, Corporate Finance, International
Using a unique sample of Twitter posts, also called tweets, we examine the impact of social media on the return, volume, and volatility of the stock market using word list and algorithmic content analysis. We show market returns may be predicted using confidence and sentiment levels. Volume is best predicted by confidence. Volatility is most related to sentiment. We examine one dimension of Twitter user characteristics, namely gender. Our results show that men are more confident and less optimistic than women when they communicate about stocks. We find differences in the ability of communications by men and women to predict market returns, volume, and volatility.
15 min read
Publication, Finance, Social Media, Gender, Behavioral Finance
