By Melissa J. Anderson

According to new research, IPO firms with male CEOs get the advantage with investors, compared to those with female CEOs. This news probably comes as no surprise, but the nuances revealed by the study point to a conclusion that should be concerning to anyone who works in a field characterized by the term “meritocracy.”

More and more research is showing that gender weighs heavily on the equation when it comes to jobs, promotions, paychecks, and – in the case of the study – how much investors are willing to pour into a business.

A working paper recently released by researchers from the University of Utah and Washington University in St. Louis suggests that female led IPO firms do worse than male ones. The study says, “Despite identical personal qualifications and firm financials, female Founder/CEOs were perceived as less capable than their male counterparts, and IPOs led by female Founder/CEOs were considered less attractive investments.”

Moreover, the researchers say, even though prospective investors were presented with identical information on performance, experience, and qualifications, “Female CEOs were seen as less experienced, less able to lead, less able to resolve TMT disputes and board deadlocks, as well as a less favorable representative of the company in the eyes of the public.”

Women continue to be perceived as less capable leaders than men, simply because they are women. While many companies purport to be meritocratic in the way they reward top producers, studies like these show that we’ve got to wonder what kinds of gender biases play into sponsorship and promotion within companies, as well as investments into IPO firms.

Cultural Bias Against Female Leaders

This study, which will be published in an upcoming edition of the Journal of Management, shows that gender bias is not about the numbers – it’s about attitudes and culture.

Lyda Bigelow, co-author of the study and assistant professor at the University of Utah’s David Eccles School of Business, said, “Bias against top-level female executives seems entrenched despite strides women have made in filling management positions within firms making their initial public offerings (IPOs).”

Along with Bigelow, the other researchers included Leif Lundmark, University of Utah – Department of Management; Judi McLean Parks, Washington University in Saint Louis – Olin Business School; and Robert Wuebker, University of Utah – David Eccles School of Business.

The experiment presented groups of MBA students (about 20% female) with data on fictitious companies, and the students were asked to assess whether the firms would be good investments. The study authors also noted that the skill level of the participants wasn’t far from the real world – “the initial analysis of IPO firms is a task of junior staff in an institutional investment firm (often a recent MBA graduate).”

The researchers switched only the gender make up of senior individuals in the company (switching names and photos, but keeping all the other information the same). It turned out that the gender make up of the management team didn’t have much of an effect on investment decisions, but the gender of the CEO had a significant impact. The researchers wrote:

“The recommended percentage to invest in the IPO was almost four times higher for firms with male CEOs at the helm than for those with female CEOs. Moreover, the anticipated share price of IPOs led by male CEOs was approximately 11% higher than those of female led IPOs.”

Even when presented with identical data (the researchers even went so far as to screen the management team photos in advance to ensure they were of equal attractiveness), investments decisions are influenced by leadership gender.