Academic journal article Journal of Business and Educational Leadership

The Impact of Gender and Cognitive Information Processing Models on CPA Exam Pass Rates: A Call for Research

Academic journal article Journal of Business and Educational Leadership

The Impact of Gender and Cognitive Information Processing Models on CPA Exam Pass Rates: A Call for Research

Article excerpt

INTRODUCTION

Gender differences have been found in the results of examinations in accounting, economics, mathematics and the sciences, as well as in CPA Examination results and in the investing arena. Studies in the educational field have found that females score higher on constructed response questions and males score higher on multiple choice test formats. Further, a number of studies have lent support to the idea that men and women interact with financial information and issues differently. This difference may be related to the way in which males and females interact with data and their information processing mechanisms and may be tied to the Selectivity Model as proposed by Meyers-Levy (1989). In other words, the authors suggest that because males and females process information differently, they may perceive the same financial information in quite different ways, and base their financial decisions on these different perceptions. Considering that gender differences have been discussed in the education literature, with males and females responding differently based on test question format, there are implications for success on standardized exams such as the CPA Examination. The purpose of this paper is to discuss these theories and call for empirical research on the potential the effects, related to examinee's gender, on CPA examination pass rates after 2017, when the format of the exam will change from predominately multiple-choice questions to the inclusion of many more simulations or constructed response questions.

GENDER DIFFERENCES IN INVESTING AND FINANCIAL DECISION MAKING

A number of studies have lent support to the idea that men and women interact with financial information and issues differently. Many studies have addressed gender differences in investment strategies, and there exists a significant body of research, both empirical and anecdotal, that supports the position that women are more risk averse than men when they invest (Barskey, Kimball and Shapiro,1996; Bruce and Johnson, 1994; Felton, Hinz, McCarthy and Turner, 1997; Jianakopolis and Barnesek 1998; Kover, 1999; Lewellen, Lease and Schlarbaum, 1977; Sunden and Surette,1998). A study commissioned by a major national brokerage firm found that gender is the third most powerful determinant of investing, after age and income are considered (Bajtelsmit and Bernasek, 1996). Men have been found to have an above average risk tolerance and are more likely to own higher-risk investments than women (Bodnar, 2016; Wang, 2011). Further, men trade their investments more frequently. Women are more likely to rely on a financial adviser, rather than do their own research or are more involved in wealth management and they are more concerned with financial security than men. In addition, men have been found to be subject to overconfidence in managing their wealth. Finally, Heo, et. al. (2016) found that risk tolerance significantly mediated the effects of gender on investment behavior. Because they are in general more risk averse, women's investment decisions are more conservative.

Often the studies finding women more risk averse in the financial arena often do not address the reason behind their risk aversion. In a meta-analysis of 150 studies that investigate the gender differences in risk aversion, Byrnes, Miller and Schafer (1999) found that the reasons for the examination of gender differences were quite varied, from health and physical harm to social acceptance. A wide range of behaviors can be classified as risk-taking. Their study categorized risk-taking into varying types of risks, ranging from dangerous risks like drunk driving or drug use, to risks that are more innocuous, such as estimating a math question on an SAT exam. The results of the Byrnes, et. al. (1999) study supported male participants consistently more likely to take risks than female participants, with gender differences varying according to context and age level. Finally, Harris, Jenkins and Glaser (2006) found women to be more likely to engage in risks which had a large potential payout, but few fixed costs or risks with it, such as the purchase of a lottery ticket. …

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