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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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    3. Ma, Mingze, 2022. "Gendered performance evaluation in CEO turnover," Journal of Corporate Finance, Elsevier, vol. 77(C).
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    5. Tongurai, Jittima & Vithessonthi, Chaiporn, 2022. "Learning, foreign operations and operating performance," Global Finance Journal, Elsevier, vol. 52(C).

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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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