CEO Gender Effect on Market Perception and Company Performance
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Date
2017-05
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Publisher
The Ohio State University
Abstract
As of 2016, women hold 4.2% of CEO positions at S&P 500 companies. This underrepresentation indicates that a barrier still exists for women in leadership. However, several female CEOs have paved the way for further advancements, which led me to wonder: How does the gender of CEOs affect company performance? This question will be examined in two ways: (1) by looking at the initial stock market reaction; and (2) by examining the stock market performance during the time of her tenure. The sample of firms includes around 100 women CEOs that have held office from 2000 to present for public companies that trade on the NYSE, NASDAQ, or American Stock Exchange. Stock returns for the day before, day of and day after the announcement date of a new, female CEO were examined. This measurement shows the change in a stock’s value and reflects the market’s initial reaction to the announcement. Based on the results gathered, there is a slight negative return of -0.51% which indicates that the market was pessimistic about the company performance during the announcement time. This value, however, is not significant enough to draw the conclusion that gender has an effect. Further analysis will be conducted to see effects in other dimensions such as return on assets, leverage, book to market value of the companies. These measurements will reflect additional ways of how the market is valuing the company as well as the actual performance during the time of a female CEO. If the results also reflect that there is no effect based on gender, the question raised is why there is a lack of female CEOs.
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Keywords
Stock Performance, Women, Gender Effect