Do Investors Prefer Female CEOs in Activist-Targeted Firms? The Role of CEO Gender, Shareholder Activism Type, and Earnings Guidance Disclosure

47 Pages Posted: 15 Apr 2022 Last revised: 8 Feb 2024

See all articles by Scott C. Jackson

Scott C. Jackson

University of Nevada, Las Vegas

Christopher P. Agoglia

University of Massachusetts at Amherst

M. David Piercey

University of Massachusetts Amherst

Date Written: February 6, 2024

Abstract

This study examines the increasing trend of shareholder activism and its impact on individual investors. Motivated by prior research that finds female CEOs are more likely to be targeted by shareholder activism, we examine how the nature of shareholder activism (Profitability-focused versus Environmental/Social-focused (“E&S-focused”)) interacts with CEO gender to create perceptions of match or mismatch for nonprofessional investors, in terms of perceived ability to address the shareholder activism. Drawing on role-congruity theory, we predict and find that female CEOs are rewarded under E&S-focused activism, but punished under profitability-focused activism, in terms of investors’ willingness to invest in the firm targeted by the activism. We also find that when managers disclose an optimistic earnings guidance forecast, this disclosure attenuates reliance on gender-based stereotypes to inform investment decisions. Finally, we find evidence that earnings guidance disclosure has a stronger impact on perceptions of female CEOs than male CEOs.

Keywords: shareholder activism, earnings guidance, CEO gender, role congruity

JEL Classification: C91, D91, G11, G41, J16, M41

Suggested Citation

Jackson, Scott and Agoglia, Christopher P. and Piercey, M. David, Do Investors Prefer Female CEOs in Activist-Targeted Firms? The Role of CEO Gender, Shareholder Activism Type, and Earnings Guidance Disclosure (February 6, 2024). Available at SSRN: https://ssrn.com/abstract=4075438 or http://dx.doi.org/10.2139/ssrn.4075438

Scott Jackson (Contact Author)

University of Nevada, Las Vegas ( email )

4505 S Maryland Pkwy
Las Vegas, NV 89154
United States

Christopher P. Agoglia

University of Massachusetts at Amherst ( email )

Department of Accounting & Information Systems
121 Presidents Drive
Amherst, MA 01003-4910
United States
413 545-5582 (Phone)
413 545-3858 (Fax)

M. David Piercey

University of Massachusetts Amherst ( email )

Isenberg School of Management
121 Presidents Drive
Amherst, MA 01003
United States

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