Working Paper | HBS Working Paper Series | 2017

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

by Paul A. Gompers and 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: Diversity; Gender; Venture Capital; Performance Improvement; Capital Markets;

Language: English Format: Print 63 pages SSRN Read Now

Citation:

Gompers, Paul A., and Sophie Q. Wang. "And the Children Shall Lead: Gender Diversity and Performance in Venture Capital." Harvard Business School Working Paper, No. 17-103, May 2017.

About the Author

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Paul A. Gompers
Eugene Holman Professor of Business Administration
Finance
Entrepreneurial Management

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