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

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Title: Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism
Author: Francis, Bill B. ; Hasan, Iftekhar ; Shen, Yinjie (Victor) ; Wu, Qiang
Series: Journal of Financial Economics
Series volume: 141
Series number: 1 ; July
Year of publication: 2021
Publication date: 27.2.2021
DOI: 10.1016/j.jfineco.2020.07.019
Pages: 372-393
Keywords: toimitusjohtajat; naiset; yritykset; sijoitusrahastot; johtaminen; johtajat; yhteistyö; viestintä
JEL: G23; G34; J16
Other keywords: Hedge fund activism; Female CEOs; Transformational leadership style; Collaborative communication; Cooperation
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.


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