In Finance, Women Face Tougher Punishments than Men

Apr 5, 2017 at 12:00am ET By Alyssa Walker

If the gender pay gap weren’t enough, women also face harsher penalties for perceived or real misconduct in the workplace than men.  So says a new research paper published in the National Bureau of Economic Research, “When Harry Fired Sally: The Double Standard in Punishing Misconduct.”

Researchers Gregor Matvos of the University of Chicago Booth School of Business, Amit Seru of Stanford University, and Mark Egan of the University of Minnesota conducted the study by observing data sets from the Financial Industry Regulatory Authority from 2005 to 2015. 

What did they find?  Matvos said, “it is only after observing that, on average, male advisers were not fired for similar transgressions that one can detect discrimination.”

What does this mean?  Women in finance get fired more often than men for fewer transgressions.

What does this look like? Female financial advisers are 20 percent more likely to lose their jobs and 30 percent less likely to find new jobs, as compared to their male counterparts. 

The research also revealed that men are more likely to commit acts of misconduct, and far less likely to be punished for them. 

The study stated, “Although men commit misconduct at a rate that is three times higher than women, women face substantially harsher punishments both by the firms that employ them, and other potential employers in the industry.” 

The study also stated, that “the financial industry is willing to give male advisers a second chance, while female advisers are likely to be cast from the industry.” 

Something else to note: the researchers also found that financial firms with a higher percentage of male executives or owners tended to punish female financial advisers more severely after misconduct.  They also tended to hire fewer women with records of misconduct.

Take-away? Before you work anywhere in the field of financial advising, do your homework.  Talk to men and women at the firm and ask them how they feel working there.  You might not be able to control what happens in a financial services firm—but you can choose where you work and with whom.

Learn more about earning an MBA in Finance.

Alyssa Walker is a freelance writer, educator, and nonprofit consultant. She lives in the White Mountains of New Hampshire with her family.

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