And the Children Shall Lead: Gender Diversity and Performance in Venture Capital

63 Pages Posted: 24 May 2017

See all articles by Paul A. Gompers

Paul A. Gompers

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Sophie Calder-Wang

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: May 22, 2017

Abstract

With an overall lack of gender and ethnic diversity in the innovation sector documented in Gompers and Wang (2017), we ask the natural next question: Does increased diversity lead to better firm performances? In this paper, we attempt to answer this question using a unique dataset of the gender of venture capital partners’ children. First, we find strong evidence that parenting more daughters leads to an increased propensity to hire female partners by venture capital firms. Second, using an instrumental variable set-up, we also show that improved gender diversity, induced by parenting more daughters, improves deal and fund performances. These effects concentrate overwhelmingly on the daughters of senior partners than junior partners. Taken together, our findings have profound implications on how the capital markets could function better with improved diversity.

JEL Classification: G02, G24, G30, L14, L20

Suggested Citation

Gompers, Paul A. and Calder-Wang, Sophie, And the Children Shall Lead: Gender Diversity and Performance in Venture Capital (May 22, 2017). Harvard Business School Finance Working Paper No. 17-103; Harvard Business School Entrepreneurial Management Working Paper No. 17-103. Available at SSRN: https://ssrn.com/abstract=2973340 or http://dx.doi.org/10.2139/ssrn.2973340

Paul A. Gompers (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6297 (Phone)
617-496-8443 (Fax)

Harvard University - Entrepreneurial Management Unit ( email )

Cambridge, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Sophie Calder-Wang

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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