IDEAS home Printed from https://ideas.repec.org/a/bla/stratm/v42y2021i10p1939-1959.html
   My bibliography  Save this article

Examining investor reactions to appointments of Black top management executives and CEOs

Author

Listed:
  • David M. Gligor
  • Millorad Novicevic
  • Javad Feizabadi
  • Andrew Stapleton

Abstract

Research summary The authors investigated investor reactions to the appointment of Black executives. The results indicate that investors respond: (1) more negatively to the announcement of Black CEO appointments than to White CEO appointments, (2) more negatively to the announcement of the Black top management team (TMT) appointments than to White TMT appointments, (3) more negatively to the announcement of Black CEO appointments than to Black TMT appointments, and (4) more negatively to the announcement of Black CEO appointments who are promoted from outside the firm than to the announcement of Black CEO appointments who are promoted from inside the firm. Moreover, the post‐hoc analysis revealed that investors react more negatively to the TMT appointment of Black executives than to the TMT appointment of Latino or Asian executives. Our results show the negative association between the appointment of Black executives and investors' reactions, and we hope it sparks future research examining causal factors and their potential solutions. Managerial summary Investors react more negatively to the announcement of Black CEO appointments than to White CEO appointments, and more negatively to the announcement of Black CEO appointments who are promoted from outside the firm than to the announcement of Black CEO appointments who are promoted from inside the firm. Moreover, investors react more negatively to TMT appointments of Black executives than to TMT appointments of White, Latino, or Asian executives.

Suggested Citation

  • David M. Gligor & Millorad Novicevic & Javad Feizabadi & Andrew Stapleton, 2021. "Examining investor reactions to appointments of Black top management executives and CEOs," Strategic Management Journal, Wiley Blackwell, vol. 42(10), pages 1939-1959, October.
    • Handle: RePEc:bla:stratm:v:42:y:2021:i:10:p:1939-1959
    DOI: 10.1002/smj.3284
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/smj.3284
    Download Restriction: no
    File URL: https://libkey.io/10.1002/smj.3284?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yan Zhang & Margarethe F. Wiersema, 2009. "Stock market reaction to CEO certification: the signaling role of CEO background," Strategic Management Journal, Wiley Blackwell, vol. 30(7), pages 693-710, July.
    2. David Gaddis Ross, 2010. "The "Dominant Bank Effect:" How High Lender Reputation Affects the Information Content and Terms of Bank Loans," The Review of Financial Studies, Society for Financial Studies, vol. 23(7), pages 2730-2756, July.
    3. David Gligor & Christopher Newman & Saim Kashmiri, 2021. "Does your skin color matter in buyer–seller negotiations? The implications of being a Black salesperson," Journal of the Academy of Marketing Science, Springer, vol. 49(5), pages 969-993, September.
    4. Pinglin He & Yulong Sun & Ying Zhang & Tao Li, 2020. "COVID–19’s Impact on Stock Prices Across Different Sectors—An Event Study Based on the Chinese Stock Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2198-2212, August.
    5. Rodolphe Durand & Luc Paugam & Hervé Stolowy, 2019. "Do investors actually value sustainability indices? Replication, development, and new evidence on CSR visibility," Strategic Management Journal, Wiley Blackwell, vol. 40(9), pages 1471-1490, September.
    6. Malmendier, Ulrike & Tate, Geoffrey, 2008. "Who makes acquisitions? CEO overconfidence and the market's reaction," Journal of Financial Economics, Elsevier, vol. 89(1), pages 20-43, July.
    7. Alessandro Minichilli & Mattias Nordqvist & Guido Corbetta & Mario Daniele Amore, 2014. "CEO Succession Mechanisms, Organizational Context, and Performance: A Socio-Emotional Wealth Perspective on Family-Controlled Firms," Journal of Management Studies, Wiley Blackwell, vol. 51(7), pages 1153-1179, November.
    8. Ayres, Ian & Siegelman, Peter, 1995. "Race and Gender Discrimination in Bargaining for a New Car," American Economic Review, American Economic Association, vol. 85(3), pages 304-321, June.
    9. Christophe Boone & Boris Lokshin & Hannes Guenter & René Belderbos, 2019. "Top management team nationality diversity, corporate entrepreneurship, and innovation in multinational firms," Strategic Management Journal, Wiley Blackwell, vol. 40(2), pages 277-302, February.
    10. Dimitrios Georgakakis & Winfried Ruigrok, 2017. "CEO Succession Origin and Firm Performance: A Multilevel Study," Journal of Management Studies, Wiley Blackwell, vol. 54(1), pages 58-87, January.
    11. Wei Shen & Albert A. Cannella,, 2003. "Will succession planning increase shareholder wealth? evidence from investor reactions to relay CEO successions," Strategic Management Journal, Wiley Blackwell, vol. 24(2), pages 191-198, February.
    12. Peggy M. Lee & Erika Hayes James, 2007. "She'‐e‐os: gender effects and investor reactions to the announcements of top executive appointments," Strategic Management Journal, Wiley Blackwell, vol. 28(3), pages 227-241, March.
    13. Caspar Rose, 2019. "Stock market reactions to CEO succession announcements: inside versus outside recruitment?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(1), pages 33-65, March.
    14. Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February.
    15. Díaz-Fernández, M. Carmen & González- Rodríguez, M. Rosario & Simonetti, Biagio, 2020. "Top management team diversity and high performance: An integrative approach based on upper echelons and complexity theory," European Management Journal, Elsevier, vol. 38(1), pages 157-168.
    16. Ali, Muhammad & Konrad, Alison M., 2017. "Antecedents and consequences of diversity and equality management systems: The importance of gender diversity in the TMT and lower to middle management," European Management Journal, Elsevier, vol. 35(4), pages 440-453.
    17. Gligor, Dr David, 2020. "Birds of a feather: The impact of race on the supplier selection and evaluation process," International Journal of Production Economics, Elsevier, vol. 230(C).
    18. Jong C. Rhim & Joy V. Peluchette & Inam Song, 2006. "Stock Market Reactions and Firm Performance Surrounding CEO Succession: Antecedents of Succession and Successor Origin," American Journal of Business, Emerald Group Publishing, vol. 21(1), pages 21-30.
    19. Hansin Bilgili & Joanna Tochman Campbell & Alan E. Ellstrand & Jonathan L. Johnson, 2017. "Riding off into the Sunset: Organizational Sensegiving, Shareholder Sensemaking, and Reactions to CEO Retirement," Journal of Management Studies, Wiley Blackwell, vol. 54(7), pages 1019-1049, November.
    20. Patrizia Pastore & Silvia Tommaso & Antonio Ricciardi, 2017. "The Market Reaction to the Appointment of Women on Corporate Boards: Evidence from the Italian Listed Companies," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(12), pages 1-64, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kalanoski, Dimitrija & Cappa, Francesco & Pinelli, Michele & Bonardi, Jean-Philippe, 2025. "The Impact of International Mergers and Acquisitions on Rivals’ Performance: The Role of Formal and Informal Institutions," Journal of World Business, Elsevier, vol. 60(3).
    2. Mohamad Sadri & Alessandro Piazza & Kam Phung & Wesley Helms, 2023. "The disparate economic outcomes of stigma: Evidence from the arms industry," Strategic Management Journal, Wiley Blackwell, vol. 44(10), pages 2489-2533, October.
    3. Cappa, Francesco & Collevecchio, Francesca & Oriani, Raffaele & Peruffo, Enzo, 2022. "Banks responding to the digital surge through Open Innovation: Stock market performance effects of M&As with fintech firms," Journal of Economics and Business, Elsevier, vol. 121(C).
    4. Seung‐Hwan Jeong & Ann Mooney & Yangyang Zhang & Timothy J. Quigley, 2023. "How do investors really react to the appointment of Black CEOs?," Strategic Management Journal, Wiley Blackwell, vol. 44(7), pages 1733-1752, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Masatoshi Kato & Yuji Honjo, 2020. "CEO Succession and New-Firm Performance: Does Successor Origin Matter?," Discussion Paper Series 213, School of Economics, Kwansei Gakuin University.
    2. Schmid, Stefan & Dauth, Tobias, 2014. "Does internationalization make a difference? Stock market reaction to announcements of international top executive appointments," Journal of World Business, Elsevier, vol. 49(1), pages 63-77.
    3. Cord H. Burchard & Juliane Proelss & Utz Schäffer & Denis Schweizer, 2021. "Bad news for announcers, good news for rivals: Are rivals fully seizing transition‐period opportunities following announcers' top management turnovers?," Strategic Management Journal, Wiley Blackwell, vol. 42(3), pages 579-607, March.
    4. Fabian Müller-Horn & Sebastian P. L. Fourné & Felix Arndt & Demola Obembe, 2024. "Cognition and gender diversity in top management teams: what do we know and where do we go?," Management Review Quarterly, Springer, vol. 74(2), pages 567-596, June.
    5. Istipliler, Baris & Ahrens, Jan-Philipp & Bort, Suleika & Isaak, Andrew, 2023. "Is exposure to the family firm always good for the next CEO? How successor pre-succession firm experience affects post-succession performance in family firms," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 167, pages 1-15.
    6. Istipliler, Baris & Ahrens, Jan-Philipp & Bort, Suleika & Isaak, Andrew, 2023. "Is exposure to the family firm always good for the next CEO? How successor pre-succession firm experience affects post-succession performance in family firms," Journal of Business Research, Elsevier, vol. 167(C).
    7. Jialei Jiang & Eun-Mi Park & Seong-Taek Park, 2021. "The Impact of the COVID-19 on Economic Sustainability—A Case Study of Fluctuation in Stock Prices for China and South Korea," Sustainability, MDPI, vol. 13(12), pages 1-17, June.
    8. An, Suwei, 2023. "Essays on incentive contracts, M&As, and firm risk," Other publications TiSEM dd97d2f5-1c9d-47c5-ba62-f, Tilburg University, School of Economics and Management.
    9. Yashraj Varma & Renuka Venkataramani & Parthajit Kayal & Moinak Maiti, 2021. "Short-Term Impact of COVID-19 on Indian Stock Market," JRFM, MDPI, vol. 14(11), pages 1-15, November.
    10. Loureiro, Gilberto & Makhija, Anil K. & Zhang, Dan, 2020. "One dollar CEOs," Journal of Business Research, Elsevier, vol. 109(C), pages 425-439.
    11. Zhang, Wenwen & Cao, Shuo & Zhang, Xuan & Qu, Xuefeng, 2023. "COVID-19 and stock market performance: Evidence from the RCEP countries," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 717-735.
    12. Zhou, Xinxing & Gao, Yan & Wang, Ping & Zhu, Bangzhu, 2022. "Examining the overconfidence and overreaction in China’s carbon markets," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 472-489.
    13. Ani SUMARMI & Dyah SAWITRI & Umi MUAWANAH & Abdul HALIM, 2021. "Indonesian Capital Market Investors’ Reaction To The Events Of The Covid-19 Pandemic," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(5), pages 138-157, October.
    14. Martynova, M., 2006. "The market for corporate control and corporate governance regulation in Europe," Other publications TiSEM 8651e281-4914-41f2-ac14-1, Tilburg University, School of Economics and Management.
    15. Doan, Minh Phuong & Sercu, Piet, 2021. "Modelling multiperiod patterns in stock-market reactions to events, with an application to serial acquisitions," International Review of Financial Analysis, Elsevier, vol. 77(C).
    16. Dauth, Tobias & Schmid, Stefan & Baldermann, Sebastian & Orban, Fabienne, 2023. "Attracting talent through diversity at the top: The impact of TMT diversity and firms' efforts to promote diversity on employer attractiveness," European Management Journal, Elsevier, vol. 41(1), pages 9-20.
    17. Frank Wiengarten & Chris K. Y. Lo & Jessie Y. K. Lam, 2017. "“How does Sustainability Leadership Affect Firm Performance? The Choices Associated with Appointing a Chief Officer of Corporate Social Responsibility”," Journal of Business Ethics, Springer, vol. 140(3), pages 477-493, February.
    18. Ilya R. P. Cuypers & Charmi Patel & Gokhan Ertug & Jiatao Li & Youtha Cuypers, 2022. "Top management teams in international business research: A review and suggestions for future research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(3), pages 481-515, April.
    19. David Newton & Mikhail Simutin, 2015. "Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality Between Genders," Management Science, INFORMS, vol. 61(10), pages 2355-2375, October.
    20. Timothy J. Quigley & Craig Crossland & Robert J. Campbell, 2017. "Shareholder perceptions of the changing impact of CEOs: Market reactions to unexpected CEO deaths, 1950–2009," Strategic Management Journal, Wiley Blackwell, vol. 38(4), pages 939-949, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:stratm:v:42:y:2021:i:10:p:1939-1959. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/0143-2095 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.