How new CEO’s gender influences firm performance

Washington D.C, Oct 21 (ANI): A recent study has revealed how new CEO’s gender may affect company performance, suggesting that a male-to-female succession tends to have lower post-succession performance than same-gender succession.

A CEO succession with a gender change may amplify the disruption of the CEO succession process and thus adversely affect company performance, according to the study by strategic management experts at Rice University and the Central University of Finance and Economics in Beijing. This dynamic will increase the likelihood of the new CEO’s early departure, the study found.

Using data from 3,320 CEO successions in companies listed on China’s Shanghai and Shenzhen stock exchanges from 1997 to 2010, the study’s authors found that both male-to-female succession and female-to-male succession increase the likelihood of the successor’s early departure.

The findings demonstrate the disruptive impact of CEO succession with gender change, particularly in the case of male-to-female succession, said lead author Yan “Anthea” Zhang, adding that their focus on the gender difference between a predecessor and a successor may offer novel insights into some of the social psychological processes surrounding the CEO succession event. While the empirical context is Chinese, the issue should be of interest to companies in the U.S.

The authors’ study contributes to a better understanding of female leadership. “Our arguments on ‘gender change effects’ provide a novel insight into how gender matters in corporate leadership positions,” Zhang said.

Because CEOs in most companies are men, if gender at the CEO post is to change, the change very likely will be male-to-female, Zhang said. “In order to avoid disruption associated with gender change, companies tend to stick to the status quo — that is, they appoint a male successor,” she said. “Therefore, companies’ tendencies to avoid such a disruption at least partially contribute to the persistence in gender inequality in corporate leadership positions.”

The study appears in Academy of Management Journal. (ANI)

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