While women have earned more than a third of MBAs awarded in the U.S. for at least a decade, and account for three of every five accountants and auditors, they make up less than 9% of CFOs within the Fortune 500, according to Catalyst, a nonprofit focused on women in business.
To be sure, it's not just in finance that women remain under-represented at the top levels. Catalyst also found that although women have accounted for between 40% to 50% of law school students for the past 15 years, they make up less than 20% of law-firm partners, too.
Of course, differing career goals, as well as cases of outright discrimination, may account for some of the gender gap. But new research is shedding light on another factor that seems to be at work. Men's overconfidence may play an important role in their near sweep of the C-suite, according to a study by Ernesto Reuben, assistant professor at Columbia University, along with researchers at the Universitat Autònoma de Barcelona in Spain, Northwestern University and the University of Chicago.
The Score: Men 30%, Women 15%
The researchers ran several experiments with MBA students. In one, the students had to complete a set of math problems; both men and women performed about the same. A year later, the researchers asked the students to recall their performance. They found that most participants overestimated their performance. No surprise there, as this tendency has been documented in other studies. More notable was the fact that men consistently rated their performance about 30% higher than it actually was. Women, by contrast, ranked their past performance about 15% higher.
The researchers then divided the participants into groups; each group had to choose a representative to compete against the others. The highest-scoring team would win a cash prize. In an added twist, the researchers gave some, but not all, representatives an additional payment.
They found that, on average, both men and women would lie about their performance during the negotiations to determine the group leader. Moreover, the incidence of lying increased as the monetary award -- given for being chosen leader -- increased. But while women kept pace with men on how frequently they lied, they didn't exaggerate their performance to the same degree.
The Difference? Overestimation
In the end, women were selected as group representatives about one-third less often than their actual performance would otherwise indicate.
"An analysis of the subjects' remembered and claimed performance confirms that the main difference between men and women is that men overestimate their past performance by a larger extent, which explains the higher frequency of male representatives," the researchers concluded.
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