UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Taking stock : testing the Lehman sisters' hypothesis. Diversity and risk-taking in the finance sector Hollingdale, Hazel


After the 2008 global financial collapse, scholars and industry leaders alike hypothesized that had the Lehman Brothers instead been the Lehman Sisters, the crash might have been avoided. The “Lehman Sisters’ Hypothesis” suggests that employing more women in the sex-segregated finance sector would not only promote gender equity, but could reduce the number of reckless risks taken, resulting in more stable economic markets. At the heart of this hypothesis is a belief that women handle risk differently than men, often stemming from essentialist understandings of gendered “differences”. However, other research suggests that rather than innate differences, decision-making is improved when groups are made up of people form diverse backgrounds with unique perspectives that lead to enhanced knowledge elaboration. In this mixed-methods dissertation, I use the Lehman Sisters’ hypothesis as a point of entry to explore the effect of sex and racial compositional diversity on risk outcomes. For the quantitative portion, I draw on 10 years of sex and race occupational composition data from 245 finance firms and their subsidiary establishments in the United States to evaluate the effect of gender and race diversity on a firm’s financial violations. In a series of negative binomial regression models, I find that higher levels of racial and gender diversity can reduce financial violations in firms, but I also find that diversity effects depend on occupation. I hypothesize that different occupations offer different levels of insulation from cultural pressures that normalize reckless risk-taking. For the qualitative component, I interviewed 62 financial professionals to glean insight into the cultural context of finance firms to better understand how policy reforms have affected women’s workplace experiences. I find that 20 years on from near industry-wide gender-equity policy reform, women in finance continue to face discrimination and harassment, yet are reluctant to use the gender equity policy that is in place. Finance firms still have gendered organizational cultures which tacitly (and sometimes explicitly) penalize women who do not conform to gendered expectations. I make a series of policy recommendations that can be used by financial firms to better catalyze diversity initiatives.

Item Media

Item Citations and Data


Attribution-NonCommercial-NoDerivatives 4.0 International