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Female-led companies more likely to be targeted by activist investors, MU research finds

Investors who buy more than 5 percent of a company’s stock with intent to change the company tend to pursue companies with female CEOs more than those with male CEOs.

April 17th, 2018

Story Contact: Austin Fitzgerald, 573-882-6217,

Women are underrepresented in leadership positions in the U.S., making up only about 5 percent of Fortune 500 CEOs. Previous research has suggested that beyond the “glass ceiling,” which makes moving up in a company more difficult for women, a “glass cliff” exists that represents increased challenges for women who attain leadership roles. Now, research from the University of Missouri has found that businesses led by female CEOs are more likely to be targeted by activist investors, who buy shares of a company with the intent to direct management decisions.

“Our results are quite disconcerting,” said Daniel Turban, a professor of management and the Emma S. Hibbs/Harry Gunnison Brown Chair of Business and Economics at the Robert J. Trulaske, Sr. College of Business. “Shareholders who buy 5 percent or more of a publicly-traded firm with the intent of changing the direction of that firm must register with the Securities and Exchange Commission as activists, which makes activist investing a very public act. If gender bias is present in such public actions, we have to wonder what other challenges these women are facing that are less public.”

Turban and his colleagues, led by Vishal Gupta of the University of Alabama, found that firms with female CEOs were more likely to be targeted by activist investors and by multiple activist investors simultaneously. Researchers controlled for firm performance to exclude investors who were simply targeting badly performing companies.

The results were consistent with the researchers’ predictions, which built upon previous research suggesting that gender role biases result from gender role stereotypes associating leadership more with masculine than feminine attributes. As a result, previous research has predicted women would continue to face gender biases after attaining leadership positions, resulting in a ‘glass cliff’ effect in which they face increased scrutiny and criticism in leadership positions.

“These findings lend more credence to the idea that women are treated differently than men when they are given leadership positions,” Turban said. “The data becomes even more worrying when you consider the challenges women face in reaching these roles in the first place. Our results suggest that gender role biases continue after they assume a leadership role, and we see they can come from external agents.”

The study, “Do women CEOs face greater threat of shareholder activism compared to male CEOs? A role congruity perspective,” was published in the Journal of Applied Psychology. Other researchers involved in the study were Seonghee Han of Pennsylvania State University at Abington, Sandra C. Mortal of the University of Alabama and Sabatino Silveri of the University of Memphis.