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  • October 2021
  • Article
  • Journal of Financial Economics

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

By: Paul A. Gompers and Sophie Calder-Wang
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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

Venture Capital; Diversity; Gender; Performance Improvement; Capital Markets

Citation

Gompers, Paul A., and Sophie Calder-Wang. "And the Children Shall Lead: Gender Diversity and Performance in Venture Capital." Journal of Financial Economics 142, no. 1 (October 2021): 1–22.
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About The Author

Paul A. Gompers

Finance
→More Publications

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More from the Authors
  • The Market for CEOs: Evidence from Private Equity By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
  • Private Equity By: Paul A. Gompers and Steven N. Kaplan
  • Failing Just Fine: Assessing Careers of Venture Capital-backed Entrepreneurs via a Non-wage Measure By: Natee Amornsiripanitch, Paul Gompers, George Hu, Will Levinson and Vladimir Mukharlyamov
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