Comments on: Fem Firm Finance

By: Johan

Johan — Thu, 23 Jul 2009 21:44:44 +0000

Well, look historically. Do you agree that there was a huge amount of discrimination against women by private companies?

Yet, couldn’t the exact same argument have been used to argue that it didn’t occur and it was all rational hiring practices?

By: curious

curious — Tue, 21 Jul 2009 16:12:12 +0000

Since that didn’t happen, I’ve gotta believe most speculators don’t believe those studies, and so I shouldn’t believe them either.

yup. because speculators are *never* influenced by cognitive biases against information they don’t like, right? right. and they’re always totally rational specimens of homo economicus, and they would *never* put on blinders to inconvenient findings that challenged their egos and worldviews. and speculators of all stripes have been making such brilliant decisions about the state of the world for the last few years. we should all think just like them.

By: Hal Finney

Hal Finney — Mon, 20 Jul 2009 00:52:32 +0000

Or another correlation scenario would be that companies flexible or unprejudiced enough to hire women already have superior management which will manifest in a variety of ways. Telling companies to improve performance by hiring women would be as pointless as telling adults to get taller by eating more.

By: Robin Hanson

Robin Hanson — Sun, 19 Jul 2009 14:37:14 +0000

So did you actually make superior (risk, cycle adjusted) returns investing this way?

By: Nancy Lebovitz

Nancy Lebovitz — Sun, 19 Jul 2009 13:53:18 +0000

I’m taking this to mean that there really is an advantage to investing in firms with high-level women executives, but investors are too rigid (probably your theory) or too prejudiced (a theory I’d include) to invest in a fund specializing in such firms. Am I correct?

IIRC, your original theory was about firms headed by women. Is there a difference between those and firms which just have a significant number of high-level women exectutives?

By: a soulless automaton

a soulless automaton — Sun, 19 Jul 2009 13:52:51 +0000

I had the same thought — if there is much sexism then more female execs might indicate higher average quality of execs.

This actually generalizes well. Speaking purely anecdotally, I have observed the following, as a rule of thumb:

If a given area has a substantial demographic skew for reasons not directly related to competence within that area, members of the minority demographic will have a higher average competence than members of the majority.

Your mileage may vary.

By: a soulless automaton

a soulless automaton — Sun, 19 Jul 2009 13:47:24 +0000

Yes, but since my scenario assumes the other main selection criteria is competence, your ideal return is if you simply disregard gender entirely and hire based on competence. Deliberately hiring women would be just addding counter-noise, and strictly suboptimal vs. hiring for the desired characteristic (interesting note: does the calculation change if you believe yourself less accurate at judging competence than the average?).

Note that this also largely explains the inability to trade effectively on the knowledge, or to change share price with it–if investors are looking at competence, not gender, the correlated benefits of female execs are already taken into account, and hiring less competent female execs won’t accomplish anything.

The main benefit would be reduced competition for recruiting competent female execs vs. competent males.

By: Gary

Gary — Sun, 19 Jul 2009 11:16:06 +0000

How about this for a simple model: women are riskier hires than men, only supra-male quality women get hired to compensate for the risk, many women blow up, and survivor bias drives the results we observe.

Possible? michael vassar?

By: Gerard O'Neill

Gerard O'Neill — Sun, 19 Jul 2009 10:52:15 +0000

Surely we need a control experiment? Say, suspend anti-discrimination legislation and let men opt to have male only workforces/management teams if the wish. Something F. Roger Devlin proposes in section 12 of his magnificent series Home Economics. Or would that not be fair?

By: Tim Tyler

Tim Tyler — Sun, 19 Jul 2009 08:57:45 +0000

Re: discriminate explicitly in the hiring process, which seems to be what’s being advocated.

The article doesn’t propose sex discrimination during hiring. It proposes that businesses “stop the brain drain” – by rearranging work life, so it fits in better for women – allowing them to work from home more when they would otherwise be having monthly or maternity employment downtime. Such proposals may be unlikley to be heeded – but they would probably not violate sex discrimination laws.