Investors View CEOs More Positively When Their Decision-Making Conforms to Gender Stereotypes

Shareholder activism is defined as attempts by corporate shareholders to use their partial ownership to influence the corporation’s decisions. A recent study published in Contemporary Accounting Research has revealed investors view CEOs more favorably when their response to shareholder activism aligns with traditional gender roles.

The study authors asked a sample of investors to review and provide their opinion on several examples of men and women CEOs’ responses to shareholder activism. Women CEOs were viewed more positively when they used cooperative approaches that are traditionally associated with women’s behavior and less favorably when they used dominative or assertive methods that are traditionally associated with men’s behavior. When reviewing male CEOs, participants were more likely to favorably view those whose behaviors aligned with stereotypical male assertiveness.

In a second experiment, the authors asked participants to review women CEOs’ explanations to their shareholders after making an uncooperative decision. When women CEOs justified their decision using a communal explanation, investors reacted more positively than when women gave an assertive explanation.

The authors believe their findings may “have implications for firm performance, particularly if CEOs’ responses to activists are influenced by how they expect to be perceived, rather than solely by what they view to be the best course of action for the firm.” They suggest future research in this area is needed to analyze this phenomenon on a long-term basis, as well as how other characteristics, such as race or sexual orientation, affect investors’ perceptions of CEOs.

The study authors included scholars from the University of Nevada, Las Vegas, Cornell University in Ithaca, New York, and Queen’s University in Ontario, Canada.