Despite the Track Records, Investors Flee When a Woman Makes CEO - Building Gender Balanced Business

• The evidence is clear that having women in various C-suite offices and on the board of directors helps a company in sales, profit and (usually) stock price.

• The reason for that “(usually)” is not what you think. Sure, shares of some companies run by women fall for normal reasons, not least of all that women are most likely to take the helm only when the situation is so dire as to guarantee at least a short-term share-price drop.

• But the real reason for qualification is that, all evidence notwithstanding, investors usually sell when a woman is appointed CEO.

• Why? Perhaps it is because a disproportionate share of the focus on the appointment is simply on the gender of the new CEO.

• In “She’-e-os: Gender Effects and Investor Reactions to the Announcements of Top Executive Appointments” (Strategic Management Journal, March 2007), Peggy Lee and Erika Hayes James show that shareholders are rarely happy when a woman reached the top post, especially if she was recruited from outside the company. (Shareholders do tend to be less hard on a stock when a woman is promoted to some other C-suite job than CEO.)

• Obviously, media coverage of the appointment emphasises the gender of the new chief in a way it never does for a man, and relative to the norm, there is a lot more coverage of the new CEO, which apparently does not help the situation.

• Lee, a WP Carey professor, told her school: “Observers have virtually no frame of reference with which to evaluate women in top management, Thus, they rely on stereotypes of women — stereotypes that are inconsistent with the leadership role.”

• Is there hope? Yes. The data came from 1990 to 2000. Perhaps for that reason, the authors wrote: “As the number of women in top management positions increases, these women should be viewed no differently from their male counterparts.”

Erik Hayes James’ summary of her article