rotmanmagazine.ca / 39THE OPTIMAL ALLOCATION OF RESOURCES across agents is critical for
economic outcomes, both at the level of the individual firm and
of the entire economy. And yet, achieving this has proven elusive.
An ongoing debate revolves around the claim that male manag-
ers obtain more resources than their female counterparts — a
pattern labelled ‘the gender gap’.
Many attempts to narrow the gender gap — ranging from
greater disclosure to governance rules — assume that it reflects
the personal bias of senior decision-makers, in particular CEOs.
However, this premise has been difficult to test because it would
entail eliciting CEO preferences and making a reliable connec-
tion between resource allocations and subsequent outcomes.
We recently set out to tackle this challenge by studying and
comparing two things: the personal backgrounds of CEOs and
their allocation of capital budgets to male and female division
managers at U.S. conglomerates. In this article we will summa-
rize our key findings.
Portrait of the CEO as a Young Man
Our sample comprised 5,679 individuals: 596 CEOs, 1,819 divi-
sion managers and 3,264 directors. The CEOs were almost ex-
clusively male (98.5%) and, on average, 56 years old. Nearly 62
per cent of them held graduate degrees, the majority of which
were MBAs. The dominant majority also served on the boards
of other companies, with the median CEO holding two external
board seats.
In comparison with CEOs, division managers were young-
er and significantly more diverse: The average manager in our
sample was 50 years old, and about eight per cent were female.
Compared with CEOs, division managers were more likely to
hold specialized graduate degrees (79%) and less likely to hold
an MBA (39%). Division managers were also significantly less
likely to hold external board seats.
To elicit CEO preferences, we relied on the evidence from
social economics that an individual’s views on gender issues are
heavily influenced by familial, environmental and educational
factors experienced until early adulthood — a period commonly
referred to as the individual’s ‘formative years’. Following is a
summary of our approach and our findings under these three
key headings.FAMILY CHARACTERISTICS. To obtain information on CEOs’ fami-
lies, we used several data sources, including federal and state
census records; state records of birth, marriage and death;
digital archives of white page directories; and obituaries. The
federal census form in our sample provided 41 standardized
variables on each member of the household, including educa-
tion (in years), occupation, employment status, the numberGENDER
A CEO’s family background and early education have a significant
effect on their later decision-making across a variety of contexts—
with profound economic implications.
by Ran Duchin, Mike Simutin and Denis Sosyura