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Finance sector proving unattractive for some women

Although executives in the finance industry say they have worked hard to promote women, the last decade has seen a decline in the percentage of women working in the most profitable business units.

Some people attribute the decline to what they say is sex bias and hostility against women in the workplace. Citing figures detailing the breakdown of the work force in Wall Street’s higher-paying jobs, they say sex discrimination may still be holding women back.

Catalyst, an advisory group that seeks to expand opportunities for women at work, recently released a report showing that a significant number of women working in the financial services industry believe sex bias is prevalent in the workplace.

But another recent study suggests that sex bias may not be the only explanation for the small number of women working at high levels on Wall Street. Some women do not have some of Wall Street’s more lucrative jobs, the study says, because they don’t want those jobs.

Clifton Green, Narasimhan Jegadeesh and Yue Tang of Emory University's Goizueta Business School in Atlanta have recently published the findings of a study they began in mid-2006. Inspired by the question of sex bias against women, the three men looked at how well women equity analysts did their jobs.

“That’s the big question we are trying to address in this paper,” Jegadeesh said.

The 52-year-old Jegadeesh said the focus of the study was limited to a small group of high-level analysts, but that the findings may be applicable to the entire industry.

The last decade was a troubled one for Wall Street as some major finance companies fought claims that widespread sex bias was holding back female workers.

Many companies responded by increasing the number of women on their staffs. But the higher-level jobs were not appealing to some women because they were so demanding, the researchers said.

Shruti Aggarwal of Merrill Lynch is an associate in the company's municipal finance department. “It affects people’s lives a lot,” Aggarwal said of her demanding work schedule.

“Man is still the main bread earner,” said Aggarwal, who has been married for two years. “The good thing for me is my husband is also working in finance.”

Lorraine Maikis, a research analyst at Merrill Lynch, said that “primarily, the burden is on the women” when couples have children and that this might hold them back in their careers.

“I think women who have children, if they take on the primary caretaker role, it’s harder for them," said Maikis, who is single. "It definitely affects their preferences.”

The Emory study found that neither affirmative action nor gender discrimination were prevalent in the equation between gender and job performance.

The Securities Industry and Financial Markets Association said in a 2005 report that finance companies increasingly turned to affirmative action to promote women.

The report said 71 percent of the companies surveyed had policies to promote diversity in the workplace, compared with 56 percent in 2001. But the percentage of women in analyst positions declined from 16 percent to 13 percent over the last 10 years, the Emory study found.

If women still faced discrimination on a large scale “perhaps only the super bright ones would get the jobs,” said Green, one of the authors of the Emory study. But figures don’t support that either.

Women analysts often have a lighter workload and their earnings estimates of the companies they cover “tend to be less accurate” compared with men, the Emory study said.

Whether gender-based discrimination still prevails in the most profitable departments of financial firms is still a question waiting to be answered.

Industry giants like Morgan Stanley and Smith Barney have paid hundreds of millions of dollars combined to settle complaints. And Merrill Lynch alone paid more than $100 million to settle discrimination claims.

Meanwhile, Equal Employment Opportunity Commission reports indicate that the number of gender discrimination complaints the agency receives has decreased slightly over the last decade.

The Emory study showed that women who are financial analysts are more likely to emerge as industry stars than men, probably because women perform better than men in areas that are hard to measure.

Maikis, who in 2006 was named one of the best analysts of the year by Institutional Investor magazine, said that even though women may be less effective in calculating earnings estimates, they make up for that with other skills.

“Women are better at explaining things from scratch,” Maikis said, noting an important part of an analyst's job is to explain to investors why they should buy certain stocks at certain times.

“I think the reason they used earnings forecasts in the study is because they are easy to evaluate,” Maikis said of the Emory study, which primarily focused on analysts forecasts to grade their performance. “Not because it’s necessarily the most important thing.”

When asked if he had received any negative feedback from women's advocates about the Emory study, Green said: “There’s not much interpretation. The data speaks on its own.”

E-mail: coa2103@columbia.edu