Market reactions to merger and acquisition decisions made by women CEOs: evidence from the European market

PurposeThis study aims to analyze the market reaction to merger and acquisition (M&A) announcements initiated by women CEOs. It seeks to determine whether the market reacts differently to strategic decisions made by female executives, particularly in light of potential gender biases.Design/methodology/approachThe study examines 146 European M&A deals initiated by female CEOs between 2010 and 2024. The event study approach is employed to calculate cumulative average abnormal returns over different timeframes around the M&A announcements. The results are compared with M&As led by male CEOs to account for gender biases in market reactions.FindingsThe study reveals that M&A transactions initiated by female CEOs are generally perceived less favorably by the market, as evidenced by negative cumulative average abnormal returns (CAAR). However, prior ownership in the target company by the acquirer mitigates this negative reaction, suggesting that ownership stakes can improve investor confidence. These findings indicate that gender stereotypes or biased perceptions of women’s leadership capabilities influence market reactions.Practical implicationsThis study suggests that companies led by female CEOs should adopt proactive communication strategies to counter negative investor sentiment and emphasize their leaders’ competencies in managing complex transactions.Originality/valueThis study provides new insights into the moderating role of the acquirer’s prior ownership stakes and broadens the discussion of gender diversity’s impact on strategic decision-making.