Daily Academic Alpha: Why Women Should make MORE than Men…

Daily Academic Alpha: Why Women Should make MORE than Men…

July 17, 2015 Uncategorized

Last updated on January 18th, 2017 at 02:54 pm

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As the proud father of 3 kids (to include 2 daughters), this set of papers, while a bit off the wall, made me smile a bit.

In short, there seems to be a negative relationship between women and lawsuits–the more women surround an organization, the less legal trouble the organization faces.

It would be great if the relationship was 100% causal, but the data don’t fully allow the authors to make such a bold claim. Nonetheless, correlation–with some evidence for causation–is good enough for me…now I have more ammo to convince my wife we should have more kids…

Does Your Daughter Make You a Better CEO?

This paper investigates the effect of the gender of CEOs’ offspring on corporate performance. I collect a dataset of the gender of CEOs’ children and employ a firm fixed-effect model to estimate a number of positive effects of CEOs having daughters. First, acquisitions, debt and equity offerings made by CEOs with more daughters are better received by the market. Second, CEOs with more daughters are less likely to overpay the targets and better use newly raised capital. Third, CEOs’ daughter(s) decrease(s) corporate litigation risk. In sum, the gender of a child is arguably a random and natural experiment, which shows a clear effect on CEOs’ behavior.

Do Women Stay Out of Trouble? Evidence from Corporate Litigation

We use a unique hand-collected dataset on corporate lawsuits to examine the effect of female representation in top management on corporate litigation. After controlling for other important variables and accounting for endogeneity using a novel instrument, we find that firms with higher representation of women in the top management team face fewer lawsuits overall, particularly lawsuits related to product liability, environment, medical liability, labor and contracts. Among firms with higher litigation risk, greater representation of female executives positively impacts the value of cash holdings. Overall, our results uncover an important and previously unidentified benefit of gender diversity in top management.


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About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray received a PhD, and was a finance professor at Drexel University. Dr. Gray’s interest in entrepreneurship and behavioral finance led him to found Alpha Architect. Dr. Gray has published three books: EMBEDDED: A Marine Corps Adviser Inside the Iraqi Army, QUANTITATIVE VALUE: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors, and DIY FINANCIAL ADVISOR: A Simple Solution to Build and Protect Your Wealth. His numerous published works has been highlighted on CBNC, CNN, NPR, Motley Fool, WSJ Market Watch, CFA Institute, Institutional Investor, and CBS News. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.