Gender preferences in the CEO successions of family firms: Family characteristics and human capital of the successor

• Empirical evidence regarding gender preferences in the CEO successions of family firms.
• Contest theoretical framework for CEO succession in family firms (game theory).
• Implications for the selectivity and design of the CEO succession contest.
• Implications for the human capital of the selected CEO successors.
• Sample of 804 successions in German family firms.

Reviews of the literature reveal that empirical work on gender and CEO successions in family firms is still rare. Building on a unique data set of CEO successions, we investigate labor market constraints in CEO succession contests in family firms with concentrated ownership. We find that a preference for male family heirs limits labor market selectivity. Furthermore, we find that only 23% of all single family successors in our sample are females, indicating that males are still the preferred choice. Family successions are significantly more likely to occur when the predecessor has a son. Under specific family structures, such as when both genders are represented among the predecessors' children, the number of female successors decreases to 19% of family successions with one successor. Sons increase the likelihood of CEO succession contest constraints. We observe that the selected female family successors seem to be equipped with higher levels of human capital compared to the selected male family successors. Our results indicate that male family successors are chosen not because of higher human capital levels but because of the contest rulers' gender preferences in favor male family heirs, which adversely affect the selectivity of CEO succession contests.