Academic journal article International Advances in Economic Research

Examining the Stock Market Response: A Comparison of Male and Female CEOs

Academic journal article International Advances in Economic Research

Examining the Stock Market Response: A Comparison of Male and Female CEOs

Article excerpt

JEL G34 * G14 * G30

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This study investigates the stock market reaction to the appointment of female CEOs. The sample covers female CEOs of Russell 3000 companies at the year end 2003 (n=50). For benchmarking the evidence about female CEOs, the study uses a sample of randomly chosen male CEOs from the same industry as the female CEO. It finds that, on the basis of the Fama-French three factor model, the abnormal returns at the announcement of CEO appointment are weakly positive for female CEOs but zero for male CEOs. While the two-year pre-announcement buy--hold cumulative abnormal returns are negative for both female and male CEOs (the difference between them is not significant), the two-year post-announcement abnormal returns are not different from zero for both the groups. The announcement-period abnormal returns for both the groups have a positive relationship with post-announcement abnormal returns. Although statistical significance is weak or absent in some cases, other findings indicate that prior to the CEO appointment, relative to male CEO companies the female CEO companies are smaller (lower market equity, sales, book assets, and number of employees), more profitable (ROE, ROA, ROI, Profit Margin), but have lower price/book ratios (price/earnings, price/sales, price/cash, market/book equity). …

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