Investors view CEOs more favorably when they respond to shareholder activism in ways that conform to gender stereotypes.
This is according to a study – “CEO gender and responses to shareholder activism” by Scott C. Jackson, Kristina M. Rennekamp, and Blake A. Steenhoven – that appeared in Contemporary Accounting Research.
For this study, the researchers conducted interviews with six CEOs and CFOs, and found that executives are acutely aware of potential investor biases and the importance of messaging when responding to activism.
Female CEOs were held in higher regard when they reacted to shareholder activism – attempts by shareholders, often hedge funds, to wield their influence as partial owners to bring about change in a corporation – using cooperative approaches. Similarly, the study found that male CEOs were regarded more highly when they used dominant or assertive stances, and less highly when they were communal.
“I think one of the most eye-opening aspects of the study was that both male and female leaders were evaluated negatively when their behavior deviated from investors’ gender-based expectations,” said Rennekamp. “This suggests that investors’ evaluations weren’t based on whether they believed that cooperating or not was the overall right approach to activists, but rather the perceived ‘right approach’ varied based on the gender of the firm’s leader.”
The first experiment’s results surprised the researchers, Rennekamp said. Female CEOs using uncooperative responses were viewed less positively than those using cooperative approaches, which are stereotypically associated with women. Male CEOs employing cooperative strategies were perceived less favorably than those adopting “agentic” – dominant or assertive – stances, which are stereotypically associated with men.
“Our research has far-reaching implications for corporate governance and shareholder relations,” Rennekamp said. “It suggests that the higher likelihood of female CEOs cooperating with activists may not stem from inherent differences in management styles. Instead, it could be a strategic response to anticipated investor reactions based on gender stereotypes.”
The study also offered a potential explanation for the observed phenomenon of female CEOs being more frequently targeted by activist shareholders. Rather than reflecting inherent gender biases or differences in management styles, this trend could be driven by the anticipation of more cooperative responses from female leaders – a strategy adopted to avoid negative investor reactions.
