A recent study finds that the likes of PepsiCo’s Indra Nooyi and Marissa Mayer, most recently of Yahoo, may have been targeted due to gender stereotypes
Even after they’ve broken the glass ceiling, women leaders aren’t home free.
A recent study reveals that activist shareholders are significantly likelier to target companies led by female chief execs than their male counterparts, and negative stereotypes about women are a big reason why. The report, published in the “Journal of Applied Psychology,” and further elaborated recently in the Harvard Business Review, found that male CEOs were targeted by such investors 6% of the time. Conversely, female leaders were the focus of such attacks 9.4% of the time.
Activist investors are minority shareholders who typically target companies that they think are underperforming and seek to profit by changing the firm’s strategy (and possibly management) and occupying seats on its board. One iconic activist is billionaire Nelson Peltz, who previously targeted women-led enterprises like PepsiCo (Indra Nooyi), Mondelez International (then managed by Irene Rosenfeld) and DuPont when it was led by Ellen Kullman. His moves led Fortune then to wonder if he had a “problem with women,” though the 75-year-old has more recently been focused on shaking up male-led P&G.
The study’s authors analyzed data from over 3,000 major American companies between 1996 and 2013. They also controlled for the so-called “glass cliff” factor, in which females are promoted to lead organizations that seen as in decline (see Yahoo’s Marissa Mayer and British Prime Minister Theresa May) and thus primed to fail, circumstances that are ripe for activists.
“We matched the sample so that a female-led firms were compared to male-led firms that were similar in a number of characteristics,” Sandra Mortal, a finance professor at the University of Alabama and a study co-author, tells Moneyish.
The results led the authors to conclude that activist shareholders target female-led firms in part because of negative connotations associated with female leadership, such as that women are weak and indecisive. They don’t think that most investors do so deliberately, but say the ambiguity of evaluating corporate performance often leads to a reliance on subconscious stereotypes.
“What’s the link between the practical action a CEO takes and the performance of the firm? It’s [often] not really clear why or how the CEO is responsible,” says Vishal K. Gupta, a management professor at the University of Alabama and a co-author. “We make attributions to the individual when it’s clear, but to the group when it’s not.”
Many of Corporate America’s most famous activist investors— Peltz, Daniel Loeb, Bill Ackman, and Carl Icahn —are men. Could this make them more prone to negative stereotyping of women? (Mortal notes that at least one study has found that venture capitalists with a daughter look more kindly on female entrepreneurs.) That said, Gupta doesn’t think the shareholder’s gender matters that much. “The template is overwhelmingly male activists [but] research evidence shows that both men and women show [reliance on] stereotypes,” he says.
Does this mean that women CEOs may feel pressured to hide symbols of femininity like having children? When Yahoo’s Mayer announced that she was pregnant with twins, there was some muttering about whether she’d be able to concentrate on doing the job and having kids. The authors note that with the exception of tech CEOs who skew younger, most corporate head honchos are typically past child-bearing age, but “women may have to deal with that addition burden,” Gupta says.
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