The effects of social bias against female analysts on markets

Abstract

I provide evidence for the effects of social bias on markets by studying female analysts. I find that the market reaction to female analysts' forecasts is weaker and slower than that to male analysts' forecasts. I also find that female analysts' forecasts are more accurate and timely than those of male analysts. Taken together, these findings imply that female analysts are underestimated even if they have better forecasting ability than male analysts. This effect decreases when female analysts are attractive, increases when the covered firm's CEO is male and is mediated by analysts' self-confidence. These results emphasize three sources of social bias against female analysts: incompetence bias, immorality bias, and credit bias. I also employ two exogenous shocks to rule out alternative explanations and conduct robustness tests to further support my results. My findings thus highlight that social bias against females remains an issue that significantly affects the capital market.