I love the introduction to this article from The Washington Post:
“Business school professors have a knack for finding some pretty bizarre links between the personal lives of CEOs and the professional results at the companies they run. Those who golf more than 22 times a year are linked with lower corporate performance, while those who run marathons have better results. Physical traits ranging from the width of a CEO’s face to the depth of his voice have been correlated with better performance and higher pay. Now, researchers are finding a link between the gender of a male CEO’s children and how well his company behaves toward society.”
The study, by academics at the University of Miami and China Europe International Business School, looked at the corporate social responsibility ratings of S&P 500 companies during the period 1992 to 2012. The authors compiled data from various sources regarding the children of CEOs and compared that against Social Ratings Data from analytics firm KLD, controlling for industry as well as firm and CEO characteristics, including family size. They found that there is indeed an “economically sizable and statistically significant” correlation: when a company’s CEO had at least one daughter, the company scored an average of 11.9% higher on CSR metrics and spent 13.4% more of its net income on CSR than the median – about one-third of the effect that occurs when the CEO is female. The study found that the impact was “strongest for diversity ratings, but also significant for broader pro-social policies related to the environment and employee relations.”
What accounts for the difference? The authors adopt the “female socialization hypothesis,” theorizing that the “male executives partially internalize their daughters’ experiences and values.” The authors point to various studies generally supporting the hypothesis, such as a 2012 study of the CEOs of small Danish family firms that found evidence of higher employee compensation, particularly to women, when the male CEO has a daughter. They also noted anecdotal evidence, including reports that when the late “U.S. Supreme Court Chief Justice William H. Rehnquist, a strong proponent of states’ rights, voted that states had to abide by the Family and Medical Leave Act, some speculated that the personal experiences involving his own daughter[, a divorced single mother with a high-pressure job,] impacted the decision….”
In conclusion, the authors suggest “an economic framework which predicts that CEOs who have a daughter exhibit an increased attachment to others in society and the well-being of stakeholders other than their shareholders. This may entail an increased concern for not only diversity, but also the environment, employee relations, as well as other aspects of corporate social responsibility.” Apparently, parents are not the only ones that instill values; the authors found “that the opposite is in fact at least as important: Children shape their parents’ beliefs and preferences, and this has real implications for decision-making also at the top echelons of Corporate America.”
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