Gender-related differences in investment decisions : through the lens of equity crowdfunding : an empirical study in collaboration with dealflow

Abstract

The remainder to progress towards full gender equality requires increased female presence in financial markets, in particular in investing. The need to better understand female investment decisions, in an environment traditionally dominated by men, is therefore crucial. Even though great attention has been paid to general gender differences within investment behaviour, the extant literature has marginally explored the nature of nonprofessional, individual decisions. The purpose of this study is to investigate how females and males differ in their investment decisions, by examining Norwegian equity crowdfunding investors. Our research therefore contributes to existing literature, by exploring whether females have specific characteristics compared to males in investment behaviour within a high-risk environment. We use a quantitative method with a qualitative supplement to analyse data retrieved from Norway’s leading equity crowdfunding platform, Dealflow. Through our analyses, we examine how female and male individual investors differ in decisions related to risk, herding behaviour, and homophily. Our first findings suggest that there are no differences between male and female investors when observing the choice of risk level. Furthermore, we observe that females do not tend to follow the crowd, thus they do not exhibit a larger degree of herding behaviour compared to males. These findings contradict conventional beliefs about female investment behaviour, as well as similar research from equity crowdfunding, which fosters a discussion exploring plausible explanations for this within our context. Lastly, our results show that females have a higher tendency than males to invest in ventures with a female entrepreneurial team. Investment decision is therefore partly influenced by homophily, leading investors to choose entrepreneurs similar to themselves in terms of gender. As we have examined an emerging field in entrepreneurial finance, our thesis provide practical implications going forward. We want to further highlight the overall implications and avenues for further research from our study, as we explore, to our knowledge, relatively new reasons for differences (similarities) in investment behaviour. Keywords - Crowdfunding, Female investors, Gender-differences, Investment decisions