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

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

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.

Suggested Citation

  • Francis, Bill B. & Hasan, Iftekhar & Shen, Yinjie (Victor) & Wu, Qiang, 2021. "Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism," Journal of Financial Economics, Elsevier, vol. 141(1), pages 372-393.
    • Handle: RePEc:eee:jfinec:v:141:y:2021:i:1:p:372-393
    DOI: 10.1016/j.jfineco.2020.07.019
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    References listed on IDEAS

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    Cited by:

    1. Claude Francoeur & Yuntian Li & Zvi Singer & Jing Zhang, 2023. "Earnings forecasts of female CEOs: quality and consequences," Review of Accounting Studies, Springer, vol. 28(3), pages 1721-1764, September.
    2. Ángel Acevedo-Duque & Romel Gonzalez-Diaz & Elena Cachicatari Vargas & Anherys Paz-Marcano & Sheyla Muller-Pérez & Guido Salazar-Sepúlveda & Giulia Caruso & Idiano D’Adamo, 2021. "Resilience, Leadership and Female Entrepreneurship within the Context of SMEs: Evidence from Latin America," Sustainability, MDPI, vol. 13(15), pages 1-17, July.
    3. Aguir, Iness & Boubakri, Narjess & Marra, Miriam & Zhu, Lu, 2023. "Gender diversity in leadership: Empirical evidence on firm credit risk," Journal of Financial Stability, Elsevier, vol. 69(C).
    4. Ma, Mingze, 2022. "Gendered performance evaluation in CEO turnover," Journal of Corporate Finance, Elsevier, vol. 77(C).
    5. Yongqiang Chu & Xinming Li & Daxuan Zhao, 2023. "Gender Diversity: From Wall Street to Main Street," Journal of Business Ethics, Springer, vol. 188(1), pages 151-168, November.
    6. Chen, Huimin (Amy) & Francis, Bill B. & Shen, Yinjie (Victor) & Wu, Qiang, 2024. "The impact of hedge fund activism on audit pricing," The British Accounting Review, Elsevier, vol. 56(2).
    7. Tongurai, Jittima & Vithessonthi, Chaiporn, 2022. "Learning, foreign operations and operating performance," Global Finance Journal, Elsevier, vol. 52(C).
    8. Minwu Kim & Sidahmed Benabderrahmane & Talal Rahwan, 2024. "Interpretable Machine Learning Models for Predicting the Next Targets of Activist Funds," Papers 2404.16169, arXiv.org, revised Oct 2024.

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    More about this item

    Keywords

    Hedge fund activism; Female CEOs; Transformational leadership style; Collaborative communication; Cooperation;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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