The fetal origins hypothesis in finance: Prenatal environment, the gender gap, and investor behavior

Henrik Cronqvist, Alessandro Previtero, Stephan Siegel, Roderick E. White

Research output: Contribution to journalReview articlepeer-review

27 Scopus citations

Abstract

We find that differences in individuals' prenatal environments explain heterogeneity in financial decisions later in life. An exogenous increase in exposure to prenatal testosterone is associated with the masculinization of financial behavior, specifically with elevated risk taking and trading in adulthood. We also examine birth weight. Those with higher birth weight are more likely to participate in the stock market, whereas those with lower birth weight tend to prefer portfolios with higher volatility and skewness, consistent with compensatory behavior. Our results contribute to the understanding of how the prenatal environment shapes an individual's behavior in financial markets later in life.

Original languageEnglish (US)
Pages (from-to)739-786
Number of pages48
JournalReview of Financial Studies
Volume29
Issue number3
DOIs
StatePublished - Mar 1 2016

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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