Having a daughter can be a delight. I should know I have two. It turns out however that having a daughter is not only a delight but that it can also have a significant effect on the decisions we make about how we run our organisations and businesses.

A fascinating new research paper describes what they call ‘the daughter effect’. The research focuses on CEOs in large American businesses and demonstrates that CEOs with daughters are more likely to hire new female directors. The ‘daughter effect’ applies for both male and female CEOs. More specifically, the evidence suggests that having a daughter is linked to 16 percentage point increase in the share of newly hired directors that are female.

The research considered firms in the S&P 100 in 2017. Financial data on the firms was combined with data on CEOs and their families compiled from Google searches, Twitter and LinkedIn[1]. The team identified the family situation of the CEOs of 56 out of the 100 companies in the S&P 100 and these form the basis for the analysis.

Maybe the ‘daughter effect’ should be no surprise. Previous studies in the sociology of the family have suggested that children can exert a significant influence on the decision-making and attitudes of their parents. The interesting thing here is that these attitudinal differences are playing out in the decisions which shape the future of some of our largest companies.

It’s not just in decisions about hiring new directors, however, where daughters exert a positive influence. Other evidence suggests that corporate CEOs with daughters are more engaged with issues around social corporate social responsibility than those without[2]. CEOs with daughters in publicly quoted companies in the US also achieve better financing and acquisitions outcomes than those without. Recent evidence also suggests that venture capitalists with daughters hire more female partners to their organisations, and have better fund and deal performance[3].

Now, the authors of the research on the ‘daughter effect’ are quick to point out that their analysis is limited by the size of the sample and its US-only focus. They highlight the importance of further research using larger samples and international data. Cultural factors may be particularly important here. Does the ‘daughter effect’ work the same in India, China or the Emirates? How does the ‘daughter effect’ work in smaller firms? Is it a spur to entrepreneurial ambition, for example? Notwithstanding these limitations these new research findings suggest some interesting reflection on current attempts to increase the number of women on boards in the UK and other aspects of recruitment. Remember, the ‘daughter effect’ applies whether the CEO themselves is either male or female.

More generally, the ‘daughter effect’ is only one influence on the recruitment and personnel decisions we make. Individuals’ competencies, background, and experience are all important too. As with other ‘unconscious biases’, however, awareness of potential daughter effects might be might be useful in reflecting on how business decisions are made in organisations, and how imbalances in diversity might be tackled.

Stephen Roper

 


Please note that the views expressed in this blog belong to the individual blogger and do not represent the official view of

the Enterprise Research Centre, its Funders or Advisory Group.


[1] See: Ari Dasgupta, Lan Ha, Spurthi Jonnalagadda, Steven Schmeiser & Hannah Youngerman (2018) The daughter effect: do CEOs with daughters hire more women to their board? Applied Economics Letters, 25:13, 891-894, DOI: 10.1080/13504851.2017.1380283.

[2] Cronqvist, H., & Yu, F. (2017). Shaped by their daughters: Executives, female socialization, and corporate social responsibility. Journal of Financial Economics, 126(3), 543-562. doi:10.1016/j.jfineco.2017.09.003

[3] Nguyen, V. Does Your Daughter Make You a Better Ceo? Available at SSRN: https://ssrn.com/abstract=2625046, 2015. 10.2139/ssrn.2625046

 

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