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Do Activist Hedge Funds Target Female CEOs? The Role of CEO Gender in Hedge Fund Activism

68 Pages Posted: 5 Aug 2017  

Bill Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology

Yinjie(Victor) Shen

Cleveland State University-Monte Ahuja College of Business

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Date Written: August 4, 2017

Abstract

Inspired by recent academic advancement as well as real-world cases and media fervor on hedge fund activism, we investigate whether, how and why activist hedge funds are more likely to target companies led by female CEOs. Using a comprehensive dataset, we first confirm that activist hedge funds indeed regard female CEOs as preferred targets. We then report findings suggesting that the plausible cause for such a gender-specific focus is differences in managerial style between male and female CEOs: instead of being self-defensive, female CEOs are more likely to communicate and cooperate with activist hedge fund managers. Further analysis reveals that, although female-led targets experience a greater increase in operational efficiency, female CEOs themselves are still more likely to be replaced, suggesting a puzzling bias.

Keywords: Hedge Fund Activism; Female CEO; Managerial Characteristics

JEL Classification: G34; J16

Suggested Citation

Francis, Bill and Shen, Yinjie(Victor) and Wu, Qiang, Do Activist Hedge Funds Target Female CEOs? The Role of CEO Gender in Hedge Fund Activism (August 4, 2017). Available at SSRN: https://ssrn.com/abstract=3013878

Bill Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology ( email )

110 8th St
Troy, NY 12180
United States

Yinjie Shen (Contact Author)

Cleveland State University-Monte Ahuja College of Business ( email )

1860 E 18th St #420
Cleveland, OH 44114
United States

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

110 8th St
Troy, NY 12180
United States
518-276-3338 (Phone)
518-276-8661 (Fax)

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