The Gender Investment Gap: Unveiling Differences in Risk Tolerance and Performance

Abstract

This thesis examines the differences in risk-taking and investment performance between male and female investors. By analyzing a dataset of 40 stocks quarterly over a five-year period, the study shows that women prefer stocks with higher book values and larger market capitalizations, indicating a more risk-averse approach compared to men. Regression analysis shows that stocks favored by women have significantly lower beta values, reflecting a reduced risk. Conversely, men tend to achieve higher market-adjusted abnormal stock returns, despite greater volatility and loss potential. These differences are influenced by both psychological characteristics and socio-economic factors, such as differences in income and financial competence. The analysis shows that men are more likely to invest in riskier stocks, leading to higher returns, while women prefer stability and lower volatility. An understanding of these gender-specific investment preferences is key to developing personalized financial advice and strategies. These findings contribute to the broader discussion on gender differences in financial behavior and highlight the potential need for more inclusive financial investment planning that takes into account the different preferences and behaviors of male and female investors.