Study finds company share prices suffer when female CEO appointments are publicized — here's why

When a company appoints a new CEO, two surprising factors may determine stock prices for the next 20 days — the gender of the new executive and how much media attention the appointment receives.

These findings come from an unpublished study conducted by researchers at Northwestern University's Kellogg School of Management. The results were shared with the Chicago Tribune.

After looking at more than 8,000 CEO appointments across 2,500 companies from 2000 to 2014, the researchers found the gender of CEO appointments had no impact on a company's market value — that is until they accounted for media attention, according to the Chicago Tribune. When the researchers looked at the CEO appointments based on how many mentions they got across 17,000 media outlets, a different story emerged.

First, since female CEO appointments accounted for just 1 percent of all appointments in the study period, they got three times as much media coverage as male appointments, according to the report. Unfortunately, female CEO appointments that had hundreds of mentions in the media were associated with a 2.5 percent drop in stock prices immediately after the executive move was publicized. However, interestingly enough, female CEO appointments that received little media coverage were actually associated with a 2 percent increase in stock prices.

These results are in contrast to stock prices following male CEO appointments. The study found heavily publicized male executive moves were associated with positive changes in stocks, and those that received little media attention had a neutral effect on stocks.

So what's going on here? The researchers told Chicago Tribune they believe stock prices increase with female CEO appointments because shareholders react positively to women in leadership positions. However, they explain the drop associated with public female CEO appointments with an assumed bias in other shareholders, according to the report. In other words, shareholders act preemptively to protect their finances if a female CEO move is incredibly public because they expect other investors to be biased.

The good news is stock prices return to normal within 20 days, the researchers told Chicago Tribune, so companies should continue to publicize female leadership appointments and know the market will bounce back.


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