Friday, August 14, 2015

Nguyen on the effects of daughters on CEO job performance

By BDG

"Does Your Daughter Make You a Better CEO?" Free Download

VINH QUANG NGUYENBoston College - Carroll School of Management

This paper investigates the effect of the gender of CEOs' offspring on corporate performance. I collect a dataset of the gender of CEOs' children and employ a firm fixed-effect model to estimate a number of positive effects of CEOs having daughters. First, acquisitions, debt and equity offerings made by CEOs with more daughters are better received by the market. Second, CEOs with more daughters are less likely to overpay the targets and better use newly raised capital. Third, CEOs' daughter(s) decrease(s) corporate litigation risk. In sum, the gender of a child is arguably a random and natural experiment, which shows a clear effect on CEOs' behavior.

[Ed.: Note that these three outcomes are all negatively correlated with measures of overconfidence.  But how random are daughters?  What's the prevalence of IVF and adoption in this demographic?]

http://lawprofessors.typepad.com/law_econ/2015/08/nguyen-on-the-effects-of-daughters-on-ceo-job-performance.html

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Comments

I was thinking of the editor's questions too. I think IVF is common but doesn't matter, because sex of the child can only be determined by ultrasound about halfway through the pregnancy (see http://www.babycenter.com/400_at-which-month-can-you-tell-the-sex-of-the-baby_850192_689.bc). Many abortions are performed then, though (in China, at least--- I don't know about the US), to get rid of girls.
So: an interesting question is what the boy-girl ratio is for CEO's. I guess I should look at the paper.

Posted by: Eric Rasmusen | Sep 5, 2015 6:37:48 AM

Having checked, the mean number of children is 2.88 and the mean number of girls is 1.4.

Posted by: Eric Rasmusen | Sep 5, 2015 6:41:27 AM

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