Gender matters: market perception of future performance
ISSN: 0307-4358
Article publication date: 10 June 2020
Issue publication date: 11 November 2020
Abstract
Purpose
This paper aims to revisit the extant evidence on gender bias in the market. Specifically, it revisits reaction to CEO announcements. Also, it explores whether the development of the bias over time and by firm size aligns with existing theory.
Design/methodology/approach
The paper examines cumulative abnormal returns around CEO announcements from 1992 through 2016 using a modified event study methodology. This evidence shown examines market reactions over time and by firm size.
Findings
Financial markets react more favorably to male CEO announcements, with a cumulative abnormal return of 49 basis points above the reaction to their female counterparts. Moreover, the paper finds that market reaction varies over time, which may be because of the increasing proportion of female CEOs, and by firm size, which may be due to the differences in new information available to investors.
Research limitations/implications
Limitations include sample size due to the paucity of female CEO announcements. This paper does not examine the effect of industry, detailed CEO characteristics or announcement content on market reaction. In addition, using an extended event window may increase the likelihood of capturing confounding events, such as mergers or earnings announcements, which limits the interpretability of the results.
Practical implications
Gender bias in financial markets creates another institutional barrier for the advancement of female professionals, as well as implies inefficient capital allocation in markets.
Originality/value
The literature in this field is still inconclusive. Furthermore, bias development over time and the effect of information on bias remain unexplored. This study aims to fill that gap; furthermore, it introduces an extended event-window approach.
Keywords
Citation
Braegelmann, K.A. and Ujah, N.U. (2020), "Gender matters: market perception of future performance", Managerial Finance, Vol. 46 No. 10, pp. 1247-1262. https://doi.org/10.1108/MF-02-2019-0055
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited