Do Women Receive Worse Financial Advice? An Audit Study in Hong Kong, China

DOWOMENRECEIVEWORSEFINANCIALADVICE? ANAUDITSTUDYINHONGKONG,CHINA UtpalBhattacharya,AmitKumar,SujataVisaria,andJingZhao NO.684 June2023 ADBECONOMICSWORKINGPAPERSERIES ASIANDEVELOPMENTBANK ADBEconomicsWorkingPaperSeries DoWomenReceiveWorseFinancialAdvice?AnAuditStudyinHongKong,China UtpalBhattacharya,AmitKumar,SujataVisaria,andJingZhao TheADBEconomicsWorkingPaperSeriespresentsresearchinprogresstoelicitcommentsandencouragedebateondevelopmentissuesinAsiaandthePacific.TheviewsexpressedarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesofADBor itsBoardofGovernorsorthegovernmentstheyrepresent. No.684|June2023 UtpalBhattacharya(ubhattac@ust.hk)ischairprofessorintheDepartmentofFinance,HongKongUniversityofScienceandTechnology.AmitKumar(amitkumar@smu.edu.sg)isassistantprofessorintheDepartmentofFinance,SingaporeManagement University.SujataVisaria(svisaria@ust.hk)isassociateprofessorintheDepartmentofEconomics,HongKongUniversityofScienceandTechnology.JingZhao (jing.v.zhao@polyu.edu.hk)isassistantprofessorofFinanceatHongKongPolytechnicUniversity. ASIANDEVELOPMENTBANK CreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO) ©2023AsianDevelopmentBank 6ADBAvenue,MandaluyongCity,1550MetroManila,PhilippinesTel+63286324444;Fax+63286362444 www.adb.org Somerightsreserved.Publishedin2023. ISSN2313-6537(print),2313-6545(electronic)PublicationStockNo.WPS230181-2 DOI:http://dx.doi.org/10.22617/WPS230181-2 TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesoftheAsianDevelopmentBank(ADB)oritsBoardofGovernorsorthegovernmentstheyrepresent. ADBdoesnotguaranteetheaccuracyofthedataincludedinthispublicationandacceptsnoresponsibilityforanyconsequenceoftheiruse.ThementionofspecificcompaniesorproductsofmanufacturersdoesnotimplythattheyareendorsedorrecommendedbyADBinpreferencetoothersofasimilarnaturethatarenotmentioned. Bymakinganydesignationoforreferencetoaparticularterritoryorgeographicarea,orbyusingtheterm“country”inthispublication,ADBdoesnotintendtomakeanyjudgmentsastothelegalorotherstatusofanyterritoryorarea. ThispublicationisavailableundertheCreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO)https://creativecommons.org/licenses/by/3.0/igo/.Byusingthecontentofthispublication,youagreetobeboundbythetermsofthislicense.Forattribution,translations,adaptations,andpermissions,pleasereadtheprovisionsandtermsofuseathttps://www.adb.org/terms-use#openaccess. ThisCClicensedoesnotapplytonon-ADBcopyrightmaterialsinthispublication.Ifthematerialisattributedtoanothersource,pleasecontactthecopyrightownerorpublisherofthatsourceforpermissiontoreproduceit.ADBcannotbeheldliableforanyclaimsthatariseasaresultofyouruseofthematerial. Pleasecontactpubsmarketing@adb.orgifyouhavequestionsorcommentswithrespecttocontent,orifyouwishtoobtaincopyrightpermissionforyourintendedusethatdoesnotfallwithintheseterms,orforpermissiontousetheADBlogo. CorrigendatoADBpublicationsmaybefoundathttp://www.adb.org/publications/corrigenda.Notes: Inthispublication,“$”referstoUnitedStatesdollars,unlessotherwisestated. ADBrecognizes“HongKong”asHongKong,China;“Korea”astheRepublicofKorea;and“Turkey”asTürkiye. ABSTRACT Wearrangedfortrainedundercovermenandwomentoposeaspotentialclientsandvisitall65localfinancialadvisoryfirmsinHongKong,China.Atfinancialplanningfirms,butnotatsecuritiesfirms,womenweremorelikelythanmentoreceiveadvicetobuyonlyindividualoronlylocalsecurities.Femaleclientswhosignaledthattheywerehighlyconfident,highlyrisktolerant,orhadadomesticoutlook,wereespeciallylikelytoreceivesuboptimaladvice.Ourtheoreticalmodelexplainsthesepatternsastheresultofstatisticaldiscriminationinteractingwithadvisors’incentives.Taste-baseddiscriminationisunlikelytoexplaintheresults. Keywords:auditstudy,gender,financialadvice,securitiesfirm,financialplanner,risktolerance,confidence,geographicoutlook JELCodes:D14,D91,G11,G24,G41 ThisresearchwassupportedbytheHongKongResearchGrantsCouncil(GRF16518816)andreceivedethicsapprovalfromHKUST’sHumanParticipantsResearchPanel(HREC16518816).ZhuoweiHuang,YuetNingChau,andJanghoonShonprovidedinvaluableresearchassistance.Wethankthemanagementandstaffofthemarketresearchcompanythatconductedthefieldwork.WearegratefultoVeroniqueLafon-Vinaisforherinspirationandsupport,andindustryexpertsMichaelBrunoBenz,GaryChow,SandraTerrenceSiu,NicTang,AnnaWong,LauPoYan,andMichaelYefortheirvaluableinsightsfromthepractitioners’perspective.ThepaperbenefitedfromconstructivesuggestionsfromTabeaBucher-Koenen,MarkEgan,TarunJain,YanJi,RikSen,ThomasShohfi,NatalieZhu,andthejournaleditor,theassociateeditor,andtwoanonymousrefereesattheJournalofFinance.ThepaperwaspresentedbySujataVisariaattheEconomicResearchandRegionalCooperationDepartmentseminarattheAsianDevelopmentBankinDecember2022duringhervisitingfellowshipandtheauthorsappreciatetheusefulcommentsreceived.WethankseminarparticipantsattheAmericanFinanceAssociation,theSwedishHouseofFinanceConferenceonConsumerBehaviorinFinancialMarkets,theKoreaDevelopmentInstituteConferenceonFrontiersinDevelopment