Friday, August 14, 2015
VINH QUANG NGUYEN, Boston 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?]