Blake Steenhoven
Assistant Professor
- Adapted from: “CEO gender and responses to shareholder activism”
- Based on Research by: Scott C. Jackson, Kristina M. Rennekamp, Blake A. Steenhoven
- Journal: Contemporary Accounting Research
Key Takeaways
- Investors judge CEOs’ responses to shareholder activism through the lens of gender stereotypes, reacting more negatively when female CEOs resist activists and when male CEOs cooperate with them.
- Female CEOs can reduce negative investor reactions to resistance by framing their decisions in communal terms, such as focusing on protecting investors.
- The tendency for female CEOs to cooperate with activists may be driven by concerns about investor backlash for defying gender expectations, rather than inherent management style differences.
How does gender impact the way activist shareholders engage with a firm? This study investigates this issue by examining how investors respond to CEO actions during shareholder activism and the role of CEO gender, and the explanations provided for those actions. The team of researchers found that investors judge firms less favorably when female CEOs resist activist demands and when male CEOs cooperate with activists. These reactions align with prevailing gender stereotypes, namely that investors expect women to be communal and men to be agentic. However, when a female CEO explains an uncooperative response using communal reasoning (e.g., emphasizing care for investors), negative investor reactions are reduced, highlighting the importance of how decisions are framed.
To reach these conclusions, Steenhoven and his team conducted two controlled experiments and a series of semi-structured interviews with CEOs and CFOs. The experiments manipulated both the gender of the CEO and the nature of their response (cooperative vs. uncooperative), as well as the type of explanation (communal vs. agentic) provided. Participants acting as investors then rated the attractiveness of the firm as an investment. The interviews provided qualitative insights, revealing that executives are aware of these gendered expectations and anticipate potential investor backlash if they act contrary to stereotypes.
The findings have practical implications for both executives and investors. For executives, especially female CEOs, the research suggests that anticipating and strategically addressing gendered expectations—such as by framing decisions communally—can help manage investor perceptions and reactions. For investors and firms, the study highlights the influence of unconscious bias in investment decisions, suggesting a need for greater awareness of how stereotypes can shape assessments of leadership and company strategy in the context of shareholder activism.