Two University professors and one Bryant University professor have discovered a new form of gender gap that manifest in insider trading.

Six years ago, Business Profs. M.P. Narayan and Nejat Seyhun and Bryant University College of Business professor A. Can Inci began to look at profitable traders, specifically in registered insider trading, by gender within publicly listed companies in the United States, and found that gender had a large influence on what kind of profits traders made.

Registered insider trading is when a businessman or businesswoman buys stocks in their own company for personal accounts. If they buy a share and the stock outperforms the market, the stock is considered profitable. Registered insider trading allows businessmen and businesswomen to be informed about the company’s progression of stock price and worth based on current market conditions.

The professors studied these traders at all levels, including officers, board directors, executives, CEOs and CFOs.

Their paper, “Gender Differences in Executives’ Access to Information,” found two contradictory facts that led them to the idea of a gender gap. First, their research found businesswomen could be better traders than men because they are less over-confident and more risk-averse, Dr. Seyhun said. But their second finding showed that a glass ceiling for the women exists in these companies.

“We basically have these two somewhat inconsistent, contradictory findings,” Seyhun said. “We decided to put them together and see what happens in the case of informed women and informed men.”

Their findings further led them to conclude that the gap stemmed from the fact that businessmen, at all ranks, are more likely to be informed and also more likely to trade more than their female counterparts.

“Even for a given title, women don’t seem to be as informed with respect to the future of the company than the men are,” Seyhun said. “That may suggest that women are at a disadvantage.”

The prevailing theory is that networks in companies are usually centered on gender. Women executives network with other women, while male executives talked to more males, which was consistent with the study’s findings.

Seyhun said their research suggests that women are at a disadvantage because of the lack of information they receive. He said to solve the problem, there needs to be more communication between men and women in professional settings.

“Businesswomen need to include senior, more connected businessmen in their networks,” he said.

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