Working Paper: NBER ID: w23454
Authors: Paul A. Gompers; Sophie Q. Wang
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.
Keywords: gender diversity; venture capital; firm performance
JEL Codes: G24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| gender of venture capital partners' children (J16) | hiring female partners (J16) |
| hiring female partners (J16) | fund and deal performance (G24) |
| gender of venture capital partners' children (J16) | fund and deal performance (G24) |