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  3. 2027
  4. Preliminary Program
  5. Diversity, Careers, and Capital Allocation
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Diversity, Careers, and Capital Allocation

Paper Session

Sunday, Jan. 3, 2027 8:00 AM - 10:00 AM (EST)

Westin DC Downtown
Hosted By: American Finance Association
  • Chair: Mila Sherman, University of Massachusetts

Race, Gender, and Careers in Asset Management: Evidence from U.S. Administrative Data

John Jianqiu Bai
,
Northeastern University
Linlin Ma
,
Peking University
Kevin Mullally
,
University of Central Florida
Aisulu Munkina
,
University of Florida
Yuehua Tang
,
University of Florida

Abstract

Using confidential administrative data from the U.S. Census Bureau, we examine whether race and gender affect compensation and career outcomes in the U.S. asset management industry. We document substantial compensation gaps: female portfolio managers earn 27% less than male peers, minority managers earn 20% less than White peers, and minority female managers face the most significant compensation penalty, with up to 44% lower compensation. Female and minority managers also face significantly higher rates of forced turnover, and female managers are less likely to be rehired following job separations. These gaps can not be explained by differences in qualifications: minority managers are more likely to attend elite schools and hold advanced degrees. Nor do they reflect differences in performance: we find no systematic disparities in investment performance or in the ability to attract investor flows. Importantly, we show that greater diversity among asset management firm owners helps mitigate these disparities: greater female and minority representation amongst the firm owners helps reduce forced turnover risk for minority managers and gender compensation gaps. Together, these findings challenge the notion that meritocratic industries are immune to discrimination and raise concerns about taste-based discrimination and potential talent misallocation in an industry central to capital markets.

Information Frictions and the Real Effects of Sustainable Investing

Cynthia Yin
,
Cornell University
Minsu Ko
,
Binghamton University

Abstract

Investors can influence firms only through what outsiders can measure. We present a simple model in which sustainable demand creates a pricing wedge, but the firm chooses both a costly internal social action and the precision of disclosure about it. When disclosure is too noisy or too costly, the wedge does not translate into real action. We test this prediction using confidential U.S. Census administrative wage records to measure firm-year employee gender pay gaps. With rich fixed effects, socially responsible ownership is unrelated to pay gaps. The relation turns more negative when boards include female directors, and these firms talk more about gender equality in earnings calls. Our results suggest that information asymmetry limits investors’ ability to change hard-to-observe internal policies.

Board Diversity and Career Progression of Women

Anushri Jain
,
Washington University in St. Louis
Rana Mohie El Din
,
Washington University in St. Louis

Abstract

Over the past two decades, many countries have implemented board gender quotas to promote corporate gender diversity. By design, these mandates mechanically increase female representation at the executive level. What remains unclear is their broader impact on women in entry-level and mid-level roles. We examine this issue using the 2018 California board gender quota as a natural experiment. Leveraging ExecuComp and a novel employer-employee dataset, we analyze its effects on women’s career progression across different organizational levels. Our findings indicate that the quota had a significant impact on the hiring and promotion of women within affected firms. Specifically, we observe a rise in both recruitment and promotion of women in mid-management positions, as well as an increase in hiring at the top management level and at the entry level. However, the quota also led to higher female turnover, particularly at the entry and top management levels. To explore potential mechanisms, we analyze employee ratings from Glassdoor, shedding light on workplace dynamics. Overall, our results suggest that board gender quotas can create more inclusive workplaces by improving women's representation across organizational tiers.

Discussant(s)
Wenting Ma
,
University of Massachusetts
Kelly Shue
,
Yale University
Nadya Malenko
,
Boston College
JEL Classifications
  • G0 - General