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

62 Pages Posted: 30 May 2017 Last revised: 17 Jul 2023

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

University of Pennsylvania - The Wharton School

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Date Written: May 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.

Suggested Citation

Gompers, Paul A. and Calder-Wang, Sophie, And the Children Shall Lead: Gender Diversity and Performance in Venture Capital (May 2017). NBER Working Paper No. w23454, Available at SSRN: https://ssrn.com/abstract=2976194

Paul A. Gompers (Contact Author)

Harvard Business School - Finance Unit ( email )

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Harvard University - Entrepreneurial Management Unit ( email )

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National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI)

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Sophie Calder-Wang

University of Pennsylvania - The Wharton School ( email )

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Philadelphia, PA 19104-6365
United States

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