Ambitious sons and understanding daughters: investor perceptions of gender and the valuation of family firms

Purpose This study aims to investigate how stereotyped expectations about appropriate male and female behavior influence investment decisions in the context of a death in family firms. When a family member dies, uncertainty about intrafamily fighting increases. The authors analyze whether investors’ valuation of how the death would affect the firm depends on descendant gender. Design/methodology/approach The authors use an event study method to analyze investor reactions to 143 deaths in 118 publicly traded family firms operating in 25 countries. The authors then test for differences in investor reaction across descendant gender. Findings Investors evaluate the potential for conflict higher and react more negatively to deaths in families with relations complicated by multiple marriages and children. The significance of male offspring in driving the negative investor reaction indicates that investors expect sons, and not daughters, to fight for positions of power. Research limitations/implications The sample is representative of the largest family firms and limits the generalizability of results to smaller and private firms. This study highlights the importance of gender biases implicit in investor decision-making. The cross-country differences underscore the significance of cultural differences regarding gender-appropriate behavior. Social implications This study highlights the importance of gender biases implicit in investor decision-making. The results also present a map of the consequences of gender biases in investor decision-making in 25 countries that vary according to economic development and perceptions about gender equality. Originality/value Societal expectations of gender-appropriate behavior predicting sons to fight for power and daughters to keep the peace manifest themselves in investor reaction to deaths in family firms. This study contributes to the literature on how gender stereotypes affect investment decisions and the financing of growth.