Finance is still a man’s world.
Despite major efforts to diversify, the financial industry is dominated by men—not only among Wall Street’s Masters of the Universe but even in supposedly gender-neutral Sweden. So are finance departments at leading U.S. business schools, according to a recent study by Poets&Quants’ Professor of the Week, Heather Tookes of the Yale School of Management.
The working paper, “Female Representation in the Academic Finance Profession,” released last August and co-authored by Mila Getmansky Sherman of the Isenberg School of Management at UMass Amherst, found that the number of female finance professors and gender equity in the field has increased recently, but women are still a small minority of tenure-track researchers and teachers in MBA finance departments.
YALE SOM’S HEATHER TOOKES: P&Q PROFESSOR OF THE WEEK
Women finance professors are paid slightly less than their male counterparts, publish less frequently, and have more female co-authors, the study determined. “Women are underrepresented in the profession, especially at top-ranked schools,” Tookes and Sherman write. “After controlling for productivity, women tend to have positions at lower-ranked institutions; they are less likely to have tenure, and they are paid less than their male colleagues. We also find significant productivity differences between men and women, with women publishing fewer papers than their male counterparts.”
The paper, which Tookes and her co-author describe as “primarily descriptive,” nonetheless quantifies the extent of the gender gap in MBA finance departments. Tookes and Sherman took the U.S. News & World Report Best Business Schools rankings from 2009-2017, selected all schools that fell within the top 100 during those years, then merged their list with faculty roster data from Academic Analytics. That yielded a sample of 1,859 finance professors from 88 top business schools. Tookes and Sherman got salary information from a smaller group of 58 business schools run by state universities, which often are required to make that information public.
They found that only 15.8% of finance professors in leading business schools are women. (That’s roughly in line with an unrelated study by leading finance researchers that said women comprise only 18% of CFA charter holders, a critical qualification to work in the financial industry.) In the business schools of public universities Tookes and Sherman examined, female finance professors earned 4.3% less than their male counterparts.
WOMEN PROFS IN FINANCE TEND TO BE LESS PRODUCTIVE ON RESEARCH
Throughout their larger sample, Tookes and her co-author found, women finance professors produced 16.3% less research than men in a discipline that’s among the most research-driven. “Given that successful publishing records are associated with higher rates of tenure and lower rates of exit from the profession, the average productivity gap of approximately 16.3% is particularly important,” the researchers observe.
Although women are about on par with men in their contributions to leading academic journals in finance, they lag in publishing articles in secondary journals, they tend to have fewer co-authors, and those co-authors are most often other female scholars. That suggests, Tookes and Sherman observe, that “women have smaller publication networks.”
Things have been changing of late. The number of women who earn PhDs in finance has been increasing, but since it takes on average eight years to get tenure at a leading business school, we have yet to see that work its way fully through the system. Still, by 2017, women represented nearly 15% of tenured finance faculty at leading business schools, a roughly 50% increase over the 10% they comprised in 2009. The pace at which women are getting tenure has risen sharply of late and so has the percentage of women new hires, suggesting the next decade could see big steps forward for women in the finance departments of leading business schools.
Tookes, 45, is a professor of finance at Yale SOM. Her research focuses on the intersection of capital markets and corporate finance, with a particular interest in credit default swaps and convertible bonds. She teaches corporate finance classes to MBAs and is also involved in Yale’s case development and case writing.
A graduate of Brown University in economics, she received her Ph.D. in finance from Cornell and has taught at Yale SOM since 2004.
Howard R. Gold is a contributing writer for Poets&Quants and a columnist at MarketWatch. His writing has appeared in Forbes, Barron’s, Money, and USAToday. Follow him on Twitter @howardrgold.