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Companies Led by CEOs with Daughters More Committed to Social Responsibility Says Finance Dept. Study

October 14, 2015
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ceos with daughters lead social change

Among the nation’s largest U.S. firms, those led by CEOs with daughters spend 13 percent more of their net profits on corporate social responsibility (CSR) efforts than those with CEOs who do not have daughters, according to a new study from the School’s Henrik Cronqvist, professor of finance. This adds up to an average of nearly $60 million more in CSR spending per year by firms that have CEOs with a daughter.

Other key findings include:

  • CEOs, whether male or female, who have a daughter, are generally much nicer to employees and more connected to the company’s impact on wider society.
  • Having a daughter makes a male CEO 31.8% more likely to make CSR decisions similar to those made by a female CEO.
  • Having a son doesn’t have the same impact on a company’s CSR mindset and spending.
  • Firms that change from a CEO who has a daughter to one who doesn’t, see a 9.4% decrease in these types of CSR-related initiatives.  
  • Hiring a new CEO who has a daughter leads to increased CSR-related activity.
  • Companies with a good CSR track record are more likely to hire CEOs with daughters.

All of the factors above – which the researchers placed into the broad category of CSR - add up to an extra $59.5 million in CSR per year on average per company. The most significant impact has to do with CSR issues related to diversity that includes everything from whether companies provide childcare and flextime, to their reluctance to lay off staff, and their penchant for sharing profit with employees. It also covers how women, minorities and the disabled are treated.

Previous research has shown that there’s some evidence of the positive impact a daughter may have on her parent in the workplace. For instance, judges and politicians with daughters tend to vote more liberally, especially around issues of reproductive rights. This research is the first time, though, that the effect on CEO behavior of large U.S. corporations has been examined.

METHODOLOGY

The researchers looked at decisions made by CEOs at nearly 400 of the largest publicly traded U.S. firms. Nearly 4 percent of the CEOs were women – all together had a total of 1,000 children. The researchers controlled for such factors as industry, firm location, firm size, profitability and the number of children of each CEO.  

“Children shape their parents' beliefs and preferences, and this has real implications for decision-making at the top echelons of corporate America and beyond,” said Cronqvist. “These findings could be important to a wide range of people including job seekers in search of a decent work/life balance, entrepreneurs researching potential investors, and even non-profits looking for corporate partners. All would be smart to dig around a bit and find out which CEOs have daughters,” added Cronqvist, who conducted the research with Frank Yu, associate professor of finance at CEIBS in China.

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