Do activist hedge funds target female CEOs? The role of CEO gender in hedge fund activism

• Published in: Journal of financial economics 2021-07, Vol.141 (1), p.372-393
• Main Authors: Francis, Bill B., Hasan, Iftekhar, Shen, Yinjie (Victor), Wu, Qiang
• Format: Article
• Language: English
• Subjects: Activism; Activists; Bias; Chief executive officers; Chief executives; Collaborative communication; Cooperation; Female CEOs; Females; Gender; Gender differences; Gender equity; Hedge fund activism; Hedge funds; Leadership; Leadership style; Political activists; Reformers; Seminars; Sex discrimination; Social reformers; Transformational leadership; Transformational leadership style; Women; Women executives
• ISSN: 0304-405X; 1879-2774
• DOI: 10.1016/j.jfineco.2020.07.019

Using a comprehensive US hedge fund activism dataset from 2003 to 2018, 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 also 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.