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Approximately 566,000 Canadian children live in poverty (Statistics Canada, 2020). This is a serious concern as poverty is associated with higher levels of internalizing and externalizing problems in children (Hosokawa & Katsura, 2017). However, these children may be better equipped to cope with poverty if they are socially competent (Hosokawa & Katsura, 2017). Social competence is the ability to successfully interact with individuals (Rose-Krasnor, 1997). The assessment of children’s social competence has primarily relied solely on informant reports (Gresham et al., 2018) although the literature has established weak to moderate associations between different informants (Gresham, Elliott, Cook, Vance, & Kettler, 2010). This illuminates the need for additional methods of assessment such as direct observations. One advantage of using direct observations in conjunction with informant reports is that it would allow us to bridge the information provided by these two sources. Additionally, it would contribute to the literature on intergenerational transfer of risk as we could investigate how childhood characteristics of mothers from disadvantaged backgrounds influence their children’s later observed social competence. The objectives of the present study were to investigate: (1) how ratings of children’s social competence as assessed by their mothers, their teachers, and themselves related to children’s observed social competence, and (2) how maternal childhood characteristics of aggression, social withdrawal, and likability impacted children’s observed social competence. 119 children between 9- and 13-years-old (66 girls) and their mothers were observed in their homes discussing a topic that they had both rated as a high source of conflict. The frequency of children’s engagement in behaviours classified as socially competent (e.g., smiling) and incompetent (e.g., interrupting) was coded using a coding system based on four questionnaires (i.e., the MESSY, the CBCL/4-18, the TRF, and the SSRS). Structural equation modeling indicated that mothers’ ratings of children’s social incompetence as well as higher levels of maternal childhood aggression or social withdrawal predicted less child engagement in socially competent behaviours. Teachers’ ratings of children’s social incompetence predicted greater child engagement in socially incompetent behaviours. Furthermore, higher levels of maternal childhood aggression were associated with children’s greater use of socially incompetent behaviours for mothers low in childhood likeability, and children’s lesser use of socially incompetent behaviours for mothers high in childhood likeability. Our results indicate that mothers’ and teachers’ reports reflect different aspects of children’s displays of social competence. Indeed, mothers appear to inform on the absence of socially competent behaviours, while teachers inform on the presence of socially incompetent behaviours. Additionally, our findings extend results on the intergenerational transfer of risk as they demonstrate that maternal childhood histories of social withdrawal represents a risk factor for their children’s later observed social competence, while maternal childhood aggression can represent both a protective or a risk factor depending on the levels of maternal childhood likeability. Overall, our results contribute to the field by operationalizing and measuring naturalistic engagement in social competence. Moreover, our results provide a greater understanding of how to interpret ratings on informant reports in term of expected child behaviours.