Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism

Bill B. Francis; Iftekhar Hasan; Yinjie (Victor) Shen; Qiang Wu

doi:10.1016/j.jfineco.2020.07.019

Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism

Bill B. Francis
, Iftekhar Hasan
, Yinjie (Victor) Shen
, Qiang Wu

Research output: Journal article publication › Journal article › Academic research › peer-review

47 Citations (Scopus)

Abstract

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.

Original language	English
Pages (from-to)	372-393
Number of pages	22
Journal	Journal of Financial Economics
Volume	141
Issue number	1
Early online date	27 Feb 2021
DOIs	https://doi.org/10.1016/j.jfineco.2020.07.019
Publication status	Published - Jul 2021

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 5 Gender Equality

Keywords

Collaborative communication
Cooperation
Female CEOs
Hedge fund activism
Transformational leadership style

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

More information

10.1016/j.jfineco.2020.07.019

http://hdl.handle.net/10397/91935

Cite this

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title = "Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism",

abstract = "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 {\textquotedblleft}glass cliff,{\textquotedblright} gender discrimination bias, and hedge fund activists{\textquoteright} 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.",

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author = "Francis, \{Bill B.\} and Iftekhar Hasan and Shen, \{Yinjie (Victor)\} and Qiang Wu",

note = "Funding Information: We thank Bill Schwert (the editor), an anonymous referee, Ren{\'e}e 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: {\textcopyright} 2021",

year = "2021",

month = jul,

doi = "10.1016/j.jfineco.2020.07.019",

language = "English",

volume = "141",

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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

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KW - Transformational leadership style

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Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism

Abstract

UN SDGs

Keywords

ASJC Scopus subject areas

More information

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