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
Date Written: October 4, 2019
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: Suggested Citation