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

60 Pages Posted: 5 Aug 2017 Last revised: 15 Oct 2019

See all articles by Bill Francis

Bill Francis

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

Iftekhar Hasan

Fordham University - Gabelli School of Business; Bank of Finland

Yinjie(Victor) Shen

Cleveland State University-Monte Ahuja College of Business

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Date Written: October 4, 2019

Abstract

Inspired by recent academic advancement as well as real-world cases and media fervor on hedge fund activism, we investigate whether 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 regard female CEOs as preferred targets. We further find that a plausible cause for this gender-specific focus is the difference in managerial style between male and female CEOs: instead of being self-defensive, female CEOs are more likely than males to communicate and cooperate with activist hedge fund managers. Further evidence suggests that the observed preference for female CEOs cannot be explained by firm fundamentals, the existence of a “glass cliff,” gender discrimination bias, or hedge fund activists’ inherent characteristics. Finally, we find that female-led targets experience a greater increase in operational performance after being targeted.

Keywords: Hedge Fund Activism; Female CEO; Managerial Characteristics

JEL Classification: G34; J16

Suggested Citation

Francis, Bill and Hasan, Iftekhar and Shen, Yinjie and Wu, Qiang, Do Activist Hedge Funds Target Female CEOs? The Role of CEO Gender in Hedge Fund Activism (October 4, 2019). Available at SSRN: https://ssrn.com/abstract=3013878 or http://dx.doi.org/10.2139/ssrn.3013878

Bill Francis

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

110 8th St
Troy, NY 12180
United States

Iftekhar Hasan

Fordham University - Gabelli School of Business ( email )

Rose Hill Campus Bronx
New York, NY 10458
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

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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