In 2016, a study from Arizona State University found that female CEOs were significantly more likely than their male peers to be targeted by activist investors. A new study by University of Alabama management professors Vishal K. Gupta and Sandra Mortal and the University of Missouri’s Daniel B. Turban comes to the same conclusion. The authors present their findings at the Harvard Business Review:
To test this, we analyzed data from 3,026 large U.S. firms between 1996 and 2013. We identified activist investor activity by looking at Securities and Exchange Commission (SEC) records. Shareholders who acquire more than 5% of the voting stock of a public company with the intention of influencing management are required by the SEC to file a Schedule 13D form. We found over 1,500 13D filings for 1,090 firms in our sample. …
We found that firms in our sample led by male CEOs were targeted by an activist 6% of the time during the study period, versus 9.4% when the CEO was female. Wolf pack attacks occurred for male and female CEOs at 1% and 1.6%, respectively. Even though these differences appear small, this means that firms with female CEOs were 50% more likely to be targeted by activists and approximately 60% more likely to be targeted by multiple activists.
The authors had hypothesized that investors were susceptible to gender role stereotypes that associate men with stronger leadership skills, and thus would be more inclined to scrutinize the actions of female CEOs, whom they either consciously or unconsciously believed to be less competent:
Our research design does not allow us to examine exactly why activist investors target female CEOs more. However, our findings are consistent with the “think manager, think male” logic, since the other potential reasons are already statistically accounted for in the regressions.
Another potential factor, noted in the Arizona State study, is the phenomenon known as the “glass cliff”: Women, who make up a small minority of CEOs, are more likely to be appointed to leadership positions most candidates don’t want, because the company is in circumstances that carry a high risk of failure. Also, the investor community is itself male-dominated; if the leadership of an investment fund is mostly or entirely made up of men, it will be more likely to succumb to implicit gender bias.
Of course, on the other hand, some activist investors like Kapor Capital and Arjuna Capital are actively pressuring companies to improve the gender balance of their leadership teams. The gender bias found in these studies would likely be mitigated by an increase in the number of women CEOs, or if more activist investors choose to focus their activism on gender equality in the C-suite.