Gender & Finance Literature Review Series Prof. François Longin Ms. Aatreyi Mitra Prof. Estefania Santacreu-Vasut ESSEC Business School October 2017

Gender & Finance Literature Review Series Research presentation #2 Slides prepared by Aatreyi Mitra Member of the Gender & Finance project ESSEC Business School About the paper : PEGGY M. LEE and ERIKA HAYES JAMES (2007) “She’-E-Os: Gender Effects & Investor Reactions to the Announcements of Top Executive Appointments” 12/10/2017 Gender & Finance

The Problem Statistics from last 40 years show: Bad News: Good News: No. of women managers increased from 18 % in 1972 to 45% Bad News: No. of women in Fortune represent 4% of top officers and less than half of 1% of CEOs. The Glass Ceiling problem: Women advance only upto to a certain level 12/10/2017 Gender & Finance

The Perception Females in executive roles are rare  “Token Status” These women are sole representatives of their social category  “Solo Status” These statuses affect the amount of attention they draw and how they are perceived Further leads to biases and detrimental stereotypes 12/10/2017 Gender & Finance

Methodology Lee & James (2007) studied the Stock market price fluctuations for set of firms in 1990-2000 using: 1624 announcements, 529 CEO appointments Information about the executive, reason for appointment, newspaper articles, press releases etc A model using independent and control variables 1 & 0 for attributes as below- 1 Female Male Firm Insider Firm Outsider Unusual circumstances (ousting, performance, restructuring etc) No unusual circumstances Industry insider Industry outsider Prior CEO experience No CEO experience previously 12/10/2017 Gender & Finance

Hypothesis 1 “Stock market reactions to the announcements of female CEO appointments will be more negative than that to the announcements of male CEO appointments”- Lee & James (2007) Their analysis (in red) supported this Hypothesis as the 3 day cumulative returns was more negative for female CEOs than male. 12/10/2017 Gender & Finance

Hypothesis 2 “On average there will be more articles written in the popular press about female CEOs than about male CEOs during their initial year in office.” -Lee & James (2007) Their sources included NY Times, FT times, Forbes, Fortune, Business week & The Economist. Their findings did not support this Hypothesis as there wasn’t significant difference in the mean number of articles for female CEOs than male CEOs. 12/10/2017 Gender & Finance

Hypothesis 3 “Reports about the appointment of a female CEO will depict information that highlights gender, gender-related, job and organizational considerations, whereas reports announcing the appointment of a male CEO will be neutral toward gender, and more job and organization focused”- Lee & James (2007) Their analysis (in red) supported this Hypothesis. Egs- Words like “Family” was among top 10 words for women but ranked 52 for men. 12/10/2017 Gender & Finance

Hypothesis 4 “Stock market reactions to the announcements of female top management (TMT) appointments will be less negative than stock market reactions to the announcements of female CEO appointments.” -Lee & James (2007) Their analysis (in red) supported this Hypothesis as the 3 day cumulative returns was more negative for female CEOs than female TMTs. 12/10/2017 Gender & Finance

Hypothesis 5 “Stock market reactions to the announcements of female top management appointments will not differ significantly from stock market reactions to the announcements of male top management appointments (TMT).” -Lee & James (2007) Their analysis (in red) supported this Hypothesis as the 3 day cumulative returns was similar for female and male TMTs. 12/10/2017 Gender & Finance

Hypothesis 6 “Stock market reactions to announcements of female CEOs will be more positive for women who are promoted from within the firm than for female outsiders.”- Lee & James (2007) Their analysis using 4 models wherein model 2 & 4 the female was from within the firm supported this Hypothesis. The sum of gender & firm insider coefficients were found positive for these 2 models. 12/10/2017 Gender & Finance

Conclusion The results indicate that shareholders respond more negatively More negatively Announcement of Female CEO appointments > male CEO appointments female CEO appointments > female appointments in top management Less negatively women who are promoted to the CEO position from within the firm > promoted externally 12/10/2017 Gender & Finance

Implications Women are perceived as violating gender role expectations due to the lack of reference Media has to be more careful in their language Stereotypes must change and will, once more women are appointed and it isn’t as rare anymore Corporates have to aware of the potential risks with female executive appointment and strategize their communication to the media accordingly 12/10/2017 Gender & Finance

Limitations and future work Event study method has low statistical power Fortune 500 in 2005: only 7 female CEOs Future research Longitudinal design tracking stock market reactions Diversity can be broadened beyond gender and include racial and ethnic 12/10/2017 Gender & Finance

References Do you want to learn more? Kanter RM. 1977. Men and Women of the Corporation. Hitt MA, Barr SH. 1989. Managerial selection decision models: examination of configural cue processing. Eagly A, Karau S, Makhijani M. 1995. Gender and the effectiveness of leaders: a meta-analysis. Eagly A, Makhijani M, Klonsky B. 1992. Gender and the evaluation of leaders: a meta-analysis. McWilliams A, Siegel D. 1997. Event studies in management research: theoretical and empirical issues. Corman SR, Kuhn T, McPhee RD, Dooley KJ. 2002. Studying complex discursive systems: centering resonance analysis of communication. Fiske S, Taylor S. 1991. Social Cognition 12/10/2017 Gender & Finance

Follow us and contact us! Gender & Finance project Twitter: @GenderFinance Facebook: Gender & Finance Website: www.genderfinance.net François Longin E-mail: longin@essec.edu Website: www.longin.fr Estefania Santacreu-Vasut E-mail: santacreuvasut@essec.edu Website: santacreuvasut.com Aatreyi Mitra E-mail: aatreyi.mitra@essec.edu 12/10/2017 Gender & Finance

Gender & Finance project Thank you ! 12/10/2017 Gender & Finance