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Investors don’t trust female-led IPOs

Just this morning we gave you a list of 41 incredible, pioneering women leading British business across all sectors in the shortlist for the First Women Awards 2012, but a study published by the David Eccles School of Business?puts the female CEO experience in a different perspective.

Although women have made huge strides in executive ranks, a gender bias is still lurking in the lack of woman-led IPOs. The research reveals that investors are less likely to trust their money to an enterprise led by a female CEO, regardless of experience, qualifications and a firm’s financial health.

Some 222 second-year MBA candidates (45 of them women) participated in the research. As part of their study on IPOs, the students created a fictitious cosmetic surgery firm that was modelled using financial data from a real company’s successful entry into the stock market.

Keeping the IPO’s financial and industry information identical, the researchers varied the gender distribution across the company’s management team. For example, first names were changed from Matthew to Martha Evans.

?Despite identical personal qualifications and firm financials, female founders or CEOs were perceived as less capable than their male counterparts, and IPOs led by female founders or CEOs were considered less attractive investments,” said Lyda Bigelow, who was part of the research team.

It’s surprising that the study points to a reluctance to invest in IPOs spearheaded by women, seeing as the number of women holding corporate officer positions grew from ten per cent to 55 per cent in the past decade.

Like the glass ceiling of corporate America that has limited the advancement of female managers, female entrepreneurs face a ?green ceiling” when it comes to financing,” the study reads. Taken as a whole, our results suggest that gender stereotypes are alive and well and, moreover, that such stereotypes impact investment decisions.


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