If you’re a female analyst on Wall Street, you’re probably achieving lower returns on your social connections than your male peers. Because who you know matters when it comes to firms you handle, but it matters way more if you’re a man.

A new working paper by Lily Fang, an associate professor of finance at INSEAD, and Sterling Haung, a PhD candidate at the school, focuses on the links between gender, connections, and career outcomes among 1,815 Wall Street analysts and their work across 8,242 firms between 1993 and 2009. Analyst-firm connections (41,000) were defined as alumni-ties with one or two senior officers or board members within the firms that the analysts cover.

Women and Men are Equally Connected

Previous research had found that “connected” financial analysts, who went to the same university as senior officer of the firms they covered, significantly outperformed in their stock recommendations and more effectively in their jobs compared to analysts without connections. Fang & Haung wondered if the impact on job performance and career trajectory differed between men and women.

The great news is they found no gender difference in how well-connected analysts are – both men and women have a connection in about 25% of the firms they cover. The bad news is they found a “big difference in how much these connections help male and female analysts in their jobs.” According to Fang in her INSEAD article, “men overall reap more benefits from connections than women both in terms of job performance and in terms of subjective evaluation by others.”

How Connections Impact On Job Performance

The study measured how analyst connections impacted upon “objective” and “subjective” performance and career outcomes: accuracy of their earnings (EPS) forecasts; price impact of their buy/sell stock recommendations; and being elected to the All-American Research Team (AA) as a “star analyst”.

The researchers found that connections led to a much stronger impact on forecast accuracy, for men. Fang notes that “while connections lead to a 2 percent improvement in accuracy rankings in general, among men, there is a further improvement of about 1.8 percent.” Put more bluntly in the report, “the connection effect is present only among men but not women.”

For women, connections to a female executive in firms they handled led to a slightly higher improvement in forecast accuracy (2.5%), but not nearly as much as male-male connections (4.7%). As Fang puts it, “Thus the value of the ‘old boys club’ is hard to refute in our data.”

Fang writes that among analysts, “The effect of connections is even greater in their stock recommendation impact or how the market reacts to their buy and sell calls. Connections improve male analysts’ recommendation impact by about 1.2 percent, but not at all for female analysts.”

Fang notes that the differing impact on job performance was strongest among young analysts, setting women back way before they approach the glass ceiling. “This vastly different ability to capitalise on connections at such an early point in their career paths could explain gender gaps that exist throughout long-term career trajectories. The cycle, it seems, starts at the entry level.”

How Connections Impact on “Star Analyst” Status

The third measure was more subjective, promotion as a “star analyst” through an opinion poll, an evaluation by thousands of institutional investors, organized by Institutional Investor – a title given to less than 8% of analysts, which impacts significantly upon career profile and salary earnings (up to 3-fold). Much of the top evaluation criteria is highly subjective such as industry knowledge, communication, responsiveness and written reports.

The researchers found connections directly contributed to male analysts’ odds of being elected an AA but had zero impact for female analysts. Importantly, there’s no gender inequality in numbers promoted to all star status: “In general, [women make up] 12% of the overall [analyst] population, but they are 14% of the star analysts so it’s not like people are not awarding women,” says Fang in Fast Company, “but the factors for them to be selected are very different than men.”

For women, those impacting factors appear to be Ivy League education (35% of women in the total sample had one compared to 25% of men) and a record of forecasting accuracy – neither of which is significant in determining whether men are elected to being a star, or promoted within it.

According to the researchers, “The results reveal that investors value analysts of different genders differently: While connection is valued by investors and affects positive career outcomes for men, for women, it is measurable achievements and competence that seem to play a larger role.”

An Insidious Gender Bias

The researchers offer two potential interpretations of their findings. One is that “men are evaluated on ‘potential’ while women are evaluated on ‘performance.’” The other is that women benefit less from connections than men because they’re still seen as “outsiders” by investors whereas men are seen as “insiders/one of our own.” Both are plausible. Neither are pleasing.

As Fang says in Fast Company, “The type of gender bias that we document, I think is more subtle, but perhaps even more insidious than the simple numbers game. We’re not finding women are under-represented. We’re finding that they’re evaluated in different ways. How do you change people’s subjective interpretation? That’s a much more difficult [issue], I think. It probably has more to do with social norms and the ways people see things.”

Fang also points out in her INSEAD article, “It is telling that while 14 percent of Wall Street all-stars are women, virtually none of the top bosses in any of the big firms are. It could be argued that even the most competent women remain in analytical roles rather than being promoted into general management because that kind of promotion entails subjective evaluations by others.”

Mentorship & Sponsorship Still Matter!

Senior Associate Editor Sarah Green at the Harvard Business Review, uses Fang & Haung’s research as a springboard into “Why ‘Network More’ is Bad Advice for Women”e, noting that “we need to stop telling women to follow a male playbook.”

She’s got a point on the playbook. But using Fang & Huang’s findings to also question the value of mentorship and sponsorship in a woman’s career advancement is dangerous. Connections with top executives in other companies who went to the same university isn’t a parallel to the support that well-formed mentorships with strong chemistry or sponsorships can provide for a woman navigating her career.

Should a proven track record be more important for the career advancement of male analysts than female analysts? Absolutely not.

But if it is, isn’t it better if you’ve got somebody in your corner – whose attention you’ve earned through your achievements and abilities – helping you wave your impressive track record around when the next career opportunity presents itself?

By Aimee Hansen