The Origins and Real Effects of the Gender Gap: Evidence from CEOs' Formative Years
98 Pages Posted: 7 May 2018 Last revised: 11 Feb 2020
Date Written: December 8, 2019
CEOs allocate more investment capital to male than female division managers. 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: CEO, gender, family descent, formative years
JEL Classification: G30, G31, G40, J16, J71, H31
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