Wolfe research activist investing pdf

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Although women are still underrepresented at the top of corporations, there is growing interest in understanding whether men and women have different experiences as CEOs. Research examines whether male and female CEOs are treated differently by activist investors, who pressure firms to alter or change their strategic policies and decisions. With shareholder activism on the rise in American financial markets, the finding that female CEOs are targeted more than male CEOs is troubling, as it can perpetuate wolfe research activist investing pdf gender stereotypes of female executives. Our research examined whether male and female CEOs are treated differently by activist investors, who pressure firms to alter or change their strategic policies and decisions. Shareholder activism is on the rise in American financial markets. Managers generally view activists antagonistically, as bullies who publicly express dissatisfaction with management and demand changes in the firm.

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An activist shareholder is a shareholder that uses an equity stake in a corporation to put pressure on its management. In comparison, a full takeover bid is a much more costly and difficult undertaking. The goals of activist shareholders range from financial increase of shareholder value through changes in corporate policy, financing structure, cost cutting , etc. Daniel Loeb , head of Third Point Management , is notable for his use of sharply written letters directed towards the CEOs of his target companies. The financial form of shareholder activism has gained popularity as management compensation at publicly traded companies and cash balances on corporate balance sheets have risen.

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Although women are still investnig at the top of corporations, there is growing interest in understanding whether men and women have different experiences as CEOs. Research examines whether male and female CEOs are treated differently by activist investjng, who pressure firms to alter or change their strategic policies and decisions. With shareholder activism on the rise in American financial markets, the finding that female CEOs are targeted more than male CEOs is troubling, as it can perpetuate negative gender stereotypes of female executives.

Our research examined whether male and female CEOs are treated differently by activist investors, who pressure firms to alter or change their strategic policies and decisions. Shareholder activism is on the rise in American financial markets. Managers generally view activists antagonistically, as bullies who activit express dissatisfaction with management and demand changes in the firm.

Much of the activism discussed in the media involves a large investor telling the CEO what to. Some high-profile examples of companies targeted by wolf pack attacks in recent years are Darden Restaurants owner of the Olive Garden chain and PetSmart. Activists are prohibited by law to group together against management without publicly disclosing their efforts.

But because it is difficult to prove activists have formed a group, activists are often able to invesring. Our reading of the relevant academic literature suggested three potential, but conflicting, answers:. So if activists are gender blind, they will be agnostic to CEO gender. And if activists view men as more suited for the managerial role, they will be biased toward male CEOs. We hypothesized that the third answer would be true: We expected that investors were susceptible to the pervasive bias associated with gender role stereotypes, and would be more likely to target female CEOs than male CEOs.

Gender stereotypes are pervasive, and tend to have more influence in ambiguous situationswhich is often the case when linking CEO decisions with firm outcomes. To test this, we analyzed data from 3, wolfe research activist investing pdf U.

We found over investong, 13D filings for 1, firms in our sample. Because firms that hire female CEOs may differ from firms that hire male ones, we controlled for a relatively large set of pxf, including firm size, profitability, leverage, dividend yield, and industry competition, in a probit model. More broadly, we conducted several additional analyses to rule out alternative explanations. Regardless of our control variables, econometric specifications, and regression techniques, our results about CEO gender were consistent.

Although activism is rare overall, it tends to be a highly publicized event, and the fact that female CEOs are targeted more than male CEOs is troubling, as it adtivist perpetuate negative gender stereotypes of female executives.

Our research design does not allow us to examine exactly why activist investors target female CEOs. We were able to observe only activis investor activity that was highly public; filing a Schedule 13D with the SEC involves a formal declaration by an investor. Wole activist investors also engage firms through behind-the-scenes actions, and gender bias is likely to be more salient when investors act in less public ways.

This gendered lens, which we believe affects how activist investors view the world, likely operates below conscious awareness, such that most investors are probably not aware of their own biases. Activists and boards need to be aware that such biases exist and seek to counteract. This matters because CEOs expend considerable time and effort dealing with activist investors. Consider the activism by investor Nelson Pletz against Indra Nooyi of Pepsico, which dragged on for about two years before they reached a truce in CEOs have to give detailed presentations about the strategy and direction of the firm, fight proxy battles for board seats, and hold intense meetings with various stakeholders to convince them that management is leading the firm.

Time activish dealing with activist investors means CEOs have less time to actually manage the firm. Thus activist investors may undermine the effectiveness of the CEO. And if female CEOs face more activist threats, their careers may suffer.

Vishal K. His research interests are activits the areas of corporate governance, gender stereotyping, and entrepreneurial leadership. His work has appeared in leading journals such as Academy of Management Review and Journal of Applied Psychology, among. Daniel B. Turban is a professor of management inveating the holder of the Emma S. His research interests include gender-role investinb, self-regulation process and motivation.

His research has been published in various journals including the Academy of Management Journal, Journal of Jnvesting Psychology, and Personnel Psychology. Corporate governance. Gupta Sandra Mortal Daniel B. Yet again, women are held to a higher standard. Executive Summary Although women are still underrepresented at the top achivist corporations, there is growing interest in understanding whether men wplfe women have different experiences as CEOs. Related Topics:.

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