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

53 Pages Posted: 5 Aug 2017 Last revised: 19 Aug 2020

See all articles by Bill Francis

Bill Francis

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

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Yinjie(Victor) Shen

Cleveland State University-Monte Ahuja College of Business

Qiang Wu

Hong Kong Polytechnic University-School of Accounting and Finance

Date Written: October 4, 2019

Abstract

Using a comprehensive hedge fund activism dataset, 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 further 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.

Keywords: Hedge fund activism; Female CEOs; Leadership style; Communication; Cooperation.

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). Journal of Financial Economics (JFE), Forthcoming, 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 ( email )

45 COLUMBUS AVENUE
GBA-5TH FLOOR
NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

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

Hong Kong Polytechnic University-School of Accounting and Finance ( email )

5182095596 (Phone)
12047-4974 (Fax)

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