Female employees benefit from a male CEO’s generosity when he becomes a father, particularly if the first child is a girl

Fatherhood and managerial style: How a male ceo’s children affect the wages of his employees

From Administrative Science Quarterly

Motivated by research suggesting that the transition to fatherhood influences a man’s values, this study examined how a male CEO’s newborn child affects the wages of his employees. It used the Database for Labor Market Research (IDA) as the source of data. The IDA contains demographic information on all firms, plants, and individuals in the Danish economy. The research found evidence not only that a male CEO generally pays his employees less generously after fathering a child, but also that this effect is moderated by the gender of the child as well as that of the employee. In particular, a male CEO pays both his female and male employees more generously after the birth of his first daughter and he pays his female employees more generously after the birth of his first child. Thus a female employee benefits doubly from the birth to her CEO of a first daughter who is also the CEO’s first child. It was revealed tmale CEOs tend to pay themselves more after fathering a child, especially if the child is a son. These results are consistent with the hypothesis that a male CEO tends to husband more resources for his own growing family after fathering a child as well as with the hypotheses that the first child activates the CEO’s generosity toward women and that the first daughter activates his generosity toward everyone. The study provides robust, albeit indirect, evidence that social preferences do play an important role in economic life. Future research could focus on different outcome variables, such as investment and acquisition behavior, diversification, competitive strategy, organizational culture, other human resources activities (e.g., hiring, promotion, and termination), and managerial cognition, as well as how a manager might anticipate changes to a competitor’s strategy as a result of changes to the family structure of the competitor’s CEO.

 

Abstract

Motivated by a growing literature in the social sciences suggesting that the transition to fatherhood has a profound effect on men’s values, we study how the wages of employees change after a male chief executive officer (CEO) has children, using comprehensive panel data on the employees, CEOs, and families of CEOs in all but the smallest Danish firms between 1996 and 2006. We find that (a) a male CEO generally pays his employees less generously after fathering a child, (b) the birth of a daughter has a less negative influence on wages than does the birth of a son and has a positive influence if the daughter is the CEO’s first, and (c) the wages of female employees are less adversely affected than are those of male employees and positively affected by the CEO’s first child of either gender. We also find that male CEOs pay themselves more after fathering a child, especially after fathering a son. These results are consistent with a desire by the CEO to husband more resources for his family after fathering a child and the psychological priming of the CEO’s generosity after the birth of his first daughter and specifically toward women after the birth of his first child of either gender.

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Article details
Dahl, M., Dezso, C., & Ross, D. (2012). Fatherhood and Managerial Style: How a Male CEO’s Children Affect the Wages of His Employees Administrative Science Quarterly, 57 (4), 669-693 DOI: 10.1177/0001839212466521

     
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