Few major deals happen without the engagement and advice of investment bankers. Whether a company is undertaking an initial public offering (IPO) or engaging in a large merger or acquisition deal, investment bankers play a critical role in advising corporate executives. Bankers routinely cultivate and build close advisory relationships with executives in the hopes that such relationships lead to lucrative advisory and service roles connected with corporate dealmaking.
Building relationships is critical for success as an investment banker. But investment bankers’ constant endeavors to nurture relationships with executives, while also maximizing their ability to enhance fees, commonly leads to allegations of banker “double-dealing,” “self-dealing, blatant conflict of interests and other chicanery.”
Beyond such conflicts, however, investment banking faces two additional issues as society grapples with rising expectations around diversity, equity, and inclusion (DEI). First, as examined in my forthcoming article, investment banking has a deeply rooted gender gap. While corporations face significant pressure to increase diversity in both boardrooms and C-suites, investment banking has faced much less pressure to do so. Even though women only accounted for 17% of senior leaders in investment banking in 2018, these low numbers may overstate women’s leadership at the top tiers of investment banking. The hand-collected data presented in the article reveals a grim reality, including at the most prominent boutique investment banks advising corporate executives. Second, as my article also explores, the culture and accepted practices of investment banking reinforce masculine norms and biases against women in banking.
The article argues that not only do these issues hinder gender equity in investment banking as a profession, but they also influence the relationship between bankers and corporate executives. Bankers often serve as one of the most crucial advisors to executives, and the norms and divides of investment banking calibrate corporate cultures and values in the C-suite—enabling the continued gender gap in corporate America. The article’s case study of the WeWork saga is an emblematic example of the relationship between investment bankers and corporate executives; namely, that bankers’ self-interested behavior advances toxic masculinity in the C-Suite and relates to the gender gap both among bankers and at the top rung of the C-Suite.
Investment Banking’s Gender Gap
Over the past decade, corporations have been under increasing pressure from various stakeholders to diversify their boards of directors and managers. However, gender disparities remain widespread in the leadership of the most prominent investment banks that advise corporate boards and executives on key transactions.
Compared to other advisors, there are few systematic industry, firm, or deal-specific disclosures about diversity in leadership in investment banking. The limited information available regarding firm diversity reflects a long-standing gender gap in the banking and finance industry. While there are signs of change in leadership at the largest financial services firms, this growth “is partly due to the rise of nontraditional C-titled roles, such as chief diversity and inclusion officer.” These non-traditional positions rarely represent the most powerful and highly compensated positions at firms.
The prospects for women’s continued progress in the financial service industry remain unclear. Despite some progress at the largest firms, the industry “still struggles to retain and promote its talented female professionals.” Moreover, women leaders report greater burnout as they undertake additional, typically devalued and unrewarded, responsibilities.
The Gender Gap at Elite Boutique Banks
In addition to the involvement of the largest investment banks, elite boutique investment banks— regularly lauded for their ability to provide less conflicted and more independent advice—have recently gained a higher share of advisory fees in transactional advisory work. News stories documenting the rise of elite boutique investment banks focus on the star bankers—almost exclusively men—at the center of the boutiques without examining how these boutique firms perpetuate investment banking’s significant gender gap.
To examine the leadership gap at elite boutique investment banks, the article presents hand-collected data on the makeup of senior investment bankers at ten leading boutique investment banks based in the United States. The findings show that the percentage of women in senior financial advisor positions remains very low. Cumulatively, seventy-one women represented 10.6% of this survey’s total 666 senior financial advisor positions. This finding likely overstates the representation of women as senior investment bankers since three of the surveyed firms (Guggenheim Partners, Houlihan Lokey, and Lazard Financial Advisory) had limited information regarding their partners or other senior investment bankers, and instead only identified their officers and directors, or executive leadership team.
Table 1: Women as Senior Financial Advisors at Elite Boutiques (as of March 2022)
| Investment Firm | Women Senior Financial Advisors | Total Senior Financial Advisors | Percentage of Women |
| Centerview Partners | 4 | 61 | 6.60% |
| Evercore Group LLC | 3 | 89 | 3.40% |
| Greenhill & Co. | 6 | 95 | 6.30% |
| Guggenheim Partners | 6 | 30 | 20% |
| Houlihan Lokey, Inc. | 3 | 13 | 23.10% |
| Lazard Financial Advisory | 5 | 15 | 33.30% |
| Moelis & Company | 20 | 181 | 11% |
| Perella Weinberg Partners LP | 6 | 66 | 9.10% |
| PJT Partners | 16 | 103 | 15.50% |
| Qatalyst Partners | 2 | 13 | 15.40% |
| Cumulative Total | 71 | 666 | 10.6% |
The Intersection of Investment Banking Culture and the Gender Gap
The gap in women’s leadership in the financial services industry reflects the deeply entrenched culture of investment banking. Portrayals of the industry paint it as a “testosterone-fueled,” competitive environment where the performance of masculinities is the norm, and “homosociality” is prevalent. Successful women bankers are treated more poorly than men, regardless of whether they go along with banking culture. For example, Sallie Krawcheck, once referred to as “the most powerful woman on wall street,” described her experience working at a leading investment bank as a “boys club” where her male coworkers “contributed to a culture of toxic masculinity by communicating that she wasn’t wanted there.” Bias against women and the “cut-throat” competitive atmosphere of banking are significant contributing factors to the gender gap in banking, exacerbated by the bonus-driven compensation regime of the industry as well as sexual discrimination and harassment in the workplace.
The norms and practices of investment banking often inhibit women’s promotion and advancement. Women in finance report that “mediocre” men are more easily promoted than women with comparable or superior capabilities due to various factors. Furthermore, women who use parental leave or work-family policies risk severe negative career consequences. Many studies confirm research findings suggesting that tournament-like cultures prevalent in investment banking acutely disadvantage women.
Implications of Investment Banking’s Gender Gap and Culture for Inclusive Corporate Leadership
While serious and pervasive, the impacts of the hyper-masculine investment banking culture on women investment bankers are far from the only issue facing the industry.
The Advisory Role of Investment Bankers & Conflicts of Interest
The culture of investment banking also affects the services and practices of bankers with respect to clients. In many transactions involving public companies, investment bankers assist the company through a myriad of roles, locating potential mergers, or sales counterparties, providing fairness opinion letters setting forth their judgments of “fair” deals, or assisting in negotiations to help close the deal.
Despite their prevalence in the corporate transactional landscape, investment banker conflicts are widespread. Compensation-contingent, tainted banker advice and banker competitiveness—including investment banking rankings on league tables—may negatively affect the quality of banker services to clients. Bankers can push corporate leaders to undertake decisions for their own financial incentives. In addition, especially in deals where management stands to receive personal gain, the close relationships between company management and financial advisors can influence advisors’ recommendations to curry favor with management.
The pervasiveness of conflicts of interest in investment banking, undeterred by even the harsh criticisms of the courts, is connected with the masculine ethos of the industry. Masculinity norms influence hyper-competitive workplaces such as investment banks, impacting the power structure and hierarchies at these firms and undermining the success of women. These norms feed into a culture of conflicts at investment banks, leaving women to face a “triple bind.” That is, women “lose if they do not play by the same terms as the men,” but also face disproportionate punishment if they engage in the same conflicted behavior as men, and “over time become less likely to apply for such positions and thus more likely, individually and as a group, to be perceived as lacking what it takes to succeed in such environments.”
Investment Banking’s Effects on the C-Suite
A less-explored aspect of the relationship between bankers and corporate executives is that the self-interested behavior of bankers may also advance toxic masculinity in the C-Suite and undermine inclusive corporate leadership. The WeWork saga is emblematic. Not only did WeWork’s CEO, Adam Neumann, engage in unethical business conduct, but there were numerous reports—and eventually lawsuits—alleging sexism and discrimination by WeWork’s senior management. The company’s “making-the-world-a-better-place rhetoric” masked a culture where women and people of color were marginalized, harassed, and demeaned.
Investment bankers—chasing large fees and continued business with the overvalued unicorn—enabled and funded Neumann’s reckless conduct and mismanagement of the company. Banking giant JPMorgan Chase was one of Neumann’s most ardent enablers, “supercharg[ing] WeWork’s visions of grandeur,” along with other banks, including Goldman Sachs and Morgan Stanley who served up even more astronomical valuations. Instead of curbing Neumann’s excesses and hubris, competition among bankers to win the lead role for WeWork’s high-profile IPO resulted in senior bankers emboldening Neumann.
WeWork’s executive team was dominated by a mentality that exacerbated masculinity contests. Neumann encouraged bravado, and male executives competed to impress him. With a nearly all-male executive team, male-bonding activities such as surfing and sitting in a sauna with him left little room for women to ascertain valuable less-formal time with Neumann outside the office. Women employees, including the few women executives at WeWork, were marginalized, and those who complained were pushed out. In fact, throughout 2018—months before the company began to embark on its failed IPO process—several lawsuits by WeWork women executives shed light on the company’s “frat-boy” culture. Neumann also faced claims of gender discrimination, including one from Medina Bardhi, his previous chief of staff. Bardhi filed a complaint with the Equal Employment Opportunity Commission, alleging that she experienced pregnancy and gender discrimination at WeWork.
There is little indication that bankers—likely aware of the suits alleging gender discrimination at the highest levels of the company—expressed any concern about WeWork and Neumann’s treatment of women. And when Neumann’s bankers did begin to express concerns with Neumann’s excessive partying at work, they expressed no concern about the company’s gender discrimination or how Neumann perpetuated a toxic environment for women at WeWork. So long as the prospects of large fees seemed imminent, Neumann’s investment bankers tolerated his well-documented “party boy” persona.
WeWork’s investment bankers were not functioning in a manner atypical to others in the industry. Bankers had similarly indulged other founder CEOs known for creating workplaces rife with discrimination and sexual harassment.
Conclusion
Investment banking faces two key issues that are only recently becoming more widely recognized as society is shifting to become more conscious of the importance of DEI. The first issue is a widely acknowledged and deeply rooted gender divide. An examination of leadership at investment banks, including at the most prominent boutique investment banks, indicates that women’s success in banking remains elusive. As the hand-collected data presented in this article shows, investment banking’s gender gap is larger than what is suggested by the industry’s public pronouncements about the value of DEI. The second issue is a culture and set of practices that reinforce masculine norms and perpetuate biases against women in banking. Investment banking is an industry rife with environments hostile to women, and the industry has been slow to recognize and ameliorate a culture of toxic masculinity.
These two issues have led to a lack of diversity in investment banking leadership, but they also have serious implications for the companies that rely on investment bankers as advisors in navigating important strategic decisions. Accustomed to a culture that tolerates—and even promotes—toxic masculinity, bankers may ignore and enable corporate leaders that are similarly hostile to women.
Disclosure and transparency are critical to understanding gender disparities in investment banking and associated barriers and incentives. For example, without accurate diversity data, stakeholders have limited opportunity to pressure investment banks to invest in fostering diversity among their leaders, and firms have fewer incentives to prioritize inclusion. Consistent discussions about the inequities women face in investment banking and how they affect the services investment bankers provide to their clients must continue to occur for meaningful change to be enacted. Moreover, without client focus on the industry’s culture, practices, and makeup, investment banks face little pressure to increase the diversity of their leadership. As companies face greater pressures to address diversity in their leadership, they should think hard about who is advising those leaders.
Afra Afsharipour is the Senior Associate Dean for Academic Affairs and the Martin Luther King, Jr. Professor of Law at the University of California, Davis School of Law.
This post was adapted from her “Investment Bankers and Inclusive Corporate Leadership” paper, available on SSRN.
