The Origins and Real Effects of the Gender Gap: Evidence from CEOs' Formative Years
69 Pages Posted: 7 May 2018 Last revised: 2 Jun 2018
Date Written: May 27, 2018
CEOs allocate more investment capital to male managers than to female managers in the same divisions. Using data from individual Census records, we find that this gender gap is driven by CEOs who grew up in male-dominated families — those where the father was the only income earner and had more education than the mother. The gender gap also increases for CEOs who attended all-male high schools and grew up in neighborhoods with greater gender inequality. The effect of gender on capital budgeting introduces frictions and erodes investment efficiency. Overall, the gender gap originates in CEO preferences developed during formative years and produces significant real effects.
Keywords: internal capital markets, conglomerates, division managers, gender, family descent
JEL Classification: G30, G31, G40, J16, J71, H31
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