Does “Gordon Gekko” Target Female CEOs?

Gordon Gekko from the film “Wall Street” Courtesy 20th Century Fox/The Everrett Collection

Do activist investors target female CEOs.

WSJ’s John D Stoll seems to believe they may well do so. He reports that academics have started to take a look at potential bias after a string of prominent women leaders—including Marissa Mayer ( Yahoo ), Mary Barra (GM), Meg Whitman (HP), Indra Nooyi ( Pepsi ) and Sandra Cochran (Cracker Barrel)—had battles with activists, who are almost exclusively men. But was the activism targetted towards women seen either as easy targets of under-performers in a rough and tumble corporate world?

Although women make up half of the nation’s workforce, only 5 percent of Fortune 1000 companies have female chief executives. Now, new research from Arizona State University reports that female CEOs are far more likely to be pressured and second-guessed by shareholders than men occupying the same leadership position.

A recent study from Arizona State University’s W. P. Carey School of Business examined “shareholder activism,” which occurs when shareholders seek to affect a corporation’s behavior by exercising their rights as owners. Though shareholders don’t run a company, there are ways for them to influence the board of directors and top management.

Reported in the 2016 paper, “The Glare of the Spotlight: Female Leadership and Shareholder Activism,” Christine Shropshire, associate professor of management at the W. P. Carey School of Business, noticed that a disproportionate amount of shareholder activism was aimed at companies with women in charge. The research examined shareholder proposals at Fortune 1000 companies during the time period 2003 to 2013.

“Controlling for other reasons investors target certain firms, our models show that gender alone explains significant activism specifically toward female CEOs,” Shropshire said. “All else held equal, female CEOs have a 27 percent likelihood of facing activism, while their male counterparts have a near zero predicted likelihood of being targeted.”

Christine Shropshire, associate professor of management at the W. P. Carey School of Business

If I were an activist investor keen to maximise profit I would certainly consider the temperament of the CEO and the BoD, as public corporate activism is risky and expensive. That said more than likely women CEOs with less M&A experience might indeed make a target corporation with unrealized shareholder value more attractive.

Gordon of course will deny any bias, indeed Gordon will deny just about everything!

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