NEW RESEARCH | “Daughter effect” increases women-CEO appointments

Despite decades of gender equality policies, only one in ten CEOs of Swedish listed companies are still women. But new research shows that personal experience can play an unexpected role in increasing gender equality in small and medium-sized enterprises.

– We see that the probability of appointing a woman as CEO increases by about four percentage points when board members are fathers of daughters, says economist Julia Liljegren at KTH.

In her doctoral thesis, she studied, among other things, whether the likelihood of recruiting a woman as CEO increases with more “daughter-fathers” on the board. Which it does.

Daughters’ influence on fathers

This phenomenon is called the ‘daughter effect’. According to the research, the effect persists even when looking only at children born after the father was elected to the board. This suggests that it is the experience of having a daughter that influences decision-making.

– The effect is of the same order of magnitude as appointing an additional woman as a board member.

The study is based on data from over 7,000 small and medium-sized Swedish companies, combining company information with data on the family situation of board members.

The gap between rhetoric and reality

Despite Sweden often being touted as one of the most gender-equal countries in the world, the glass ceiling in the business world is still very much in place.

– Business leaders manage a lot of resources. When women are not fully involved at the top, we risk not making the best use of all the skills available, says Julia Liljegren and continues

– The effects of increased gender equality are not always visible quarter by quarter, so long-term incentives are needed to support sustainable and more inclusive leadership. Otherwise, ownership of capital and influence tends to remain concentrated in a narrower circle than the talent base warrants.

Proposal: Gender equality reserve

To accelerate more equal representation on company boards, she proposes a voluntary tax rule – an Equality Reserve.

– The model allows companies to set aside part of their pre-tax profits for clearly defined initiatives that increase the representation of women in management and on boards. The allocation will be tax-deductible in the same way as investments in, for example, research or environmental technology.

Examples of initiatives that could be funded include mentoring, leadership programs and inclusive recruitment processes.

From everyday to community level

For Julia Liljegren, the conclusion of the research is clear: even small changes in everyday life can have big consequences at the societal level.

– This shows that gender equality is not just a political issue, but that personal experiences can also change business decisions. The small things in everyday life can have consequences in both business and society at large, she says.

Contact julia.liljegren@indek.kth.se

More about the thesis
Julia Liljegren recently defended her thesis Corporate Governance and Gender Diversity: Endogenous Preferences and Fiscal Policy Design at KTH.