TY - JOUR
T1 - Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism
AU - Francis, Bill B.
AU - Hasan, Iftekhar
AU - Shen, Yinjie (Victor)
AU - Wu, Qiang
N1 - Funding Information:
We thank Bill Schwert (the editor), an anonymous referee, Renée Adams, Nicole Boyson, Alon Brav, Wei Jiang, Na Dai, Ying Huang, Agnes Cheng, Ji-Chai Lin, John Wei, Xian Gu, Thomas Shohfi, Huimin Chen, Haimeng Teng, and seminar and conference participants at Rensselaer Polytechnic Institute, The Hong Kong Polytechnic University, the Central University of Finance and Economics, Cleveland State University, Morgan State University, Zhejiang University, the 2017 FMA Annual Meetings, and the 2017 PhD. Colloquium at Fordham University for helpful comments. All authors acknowledge research support from their institutions.
Publisher Copyright:
© 2021
PY - 2021/7
Y1 - 2021/7
N2 - Using a comprehensive US hedge fund activism dataset from 2003 to 2018, we find that activist hedge funds are about 52% more likely to target firms with female CEOs compared to firms with male CEOs. We find that firm fundamentals, the existence of a “glass cliff,” gender discrimination bias, and hedge fund activists’ inherent characteristics do not explain the observed gender effect. We also find that the transformational leadership style of female CEOs is a plausible explanation for this gender effect: instead of being self-defensive, female CEOs are more likely to communicate and cooperate with hedge fund activists to achieve intervention goals. Finally, we find that female-led targets experience greater increases in market and operational performance subsequent to hedge fund targeting.
AB - Using a comprehensive US hedge fund activism dataset from 2003 to 2018, we find that activist hedge funds are about 52% more likely to target firms with female CEOs compared to firms with male CEOs. We find that firm fundamentals, the existence of a “glass cliff,” gender discrimination bias, and hedge fund activists’ inherent characteristics do not explain the observed gender effect. We also find that the transformational leadership style of female CEOs is a plausible explanation for this gender effect: instead of being self-defensive, female CEOs are more likely to communicate and cooperate with hedge fund activists to achieve intervention goals. Finally, we find that female-led targets experience greater increases in market and operational performance subsequent to hedge fund targeting.
KW - Collaborative communication
KW - Cooperation
KW - Female CEOs
KW - Hedge fund activism
KW - Transformational leadership style
UR - http://www.scopus.com/inward/record.url?scp=85102463377&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2020.07.019
DO - 10.1016/j.jfineco.2020.07.019
M3 - Journal article
AN - SCOPUS:85102463377
SN - 0304-405X
VL - 141
SP - 372
EP - 393
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 1
ER -