Gender Equity Investing

Glass Cliff Challenges: Activists Take Aim at Women CEOs


While women comprise just 5% of CEOs at US publicly traded companies, they may face more scrutiny than their male colleagues—a phenomenon known as the “glass cliff.”

A play on the “glass ceiling” that figuratively blocks women from ascending into C-suite roles, the glass cliff is when women are named to top jobs, especially during periods of turmoil at publicly traded companies, but then find it more difficult to succeed. A University of Alabama study found that women CEOs were 50% more likely to be targeted by activist investors and 60% more likely to find themselves in the crosshairs of “wolf pack” activism, when multiple activist investors target the same firm. The researchers blamed this disparity on pervasive bias associated with gender role stereotypes.

Glass Cliff under the Microscope

The University of Alabama study reviewed data from 3,026 large firms between 1996 and 2013. The researchers also looked at data from more than 1,500 Schedule 13D forms, which are filed by shareholders who acquire more than 5% of voting stock in a publicly traded company. The form requires shareholders to explain why they made the purchase.

Results showed that women CEOs were targeted 9.4% of the study period’s duration, compared with 6% for male CEOs. In “wolf-pack attack” situations, women were targets for 1.6% of the study period’s duration, versus 1% for men in the top jobs.

As part of its modeling and analysis, the research team controlled for other variables that may influence shareholder activism, including firm size, profitability, and leverage.

“Although activism is rare overall, it tends to be a highly publicized event, and the fact that female CEOs are targeted more than male CEOs is troubling, as it may perpetuate negative gender stereotypes of female executives,” wrote researchers Vishal K. Gupta, Sandra Mortal, and Daniel B. Turban in the Harvard Business Review.

Indeed, there’s no shortage of examples of female CEOs who have come under fire from activists. Sheri McCoy of cosmetics firm Avon, Irene Rosenfeld of Mondelēz International, and Marissa Mayer of Yahoo all stepped down in 2017 after taking heat from activists due to a variety of factors, according to The New York Times.

“All of this just underscores how tenuous progress for women in the C.E.O. job really is,” Brande Stellings of Catalyst, a nonprofit group supporting the advancement of women in business, told the Times. “It’s pretty sad to see we’re struggling to tread water at having women represent 5 percent of C.E.O.s.”

Mitigating the Glass Cliff Effect

Gender-lens issues are emerging as a powerful consideration for investors who want to make a positive impact. An October 2017 gender-lens investing conference hosted by Glenmede found that individual and institutional investors can push for gender-diverse values and generate a competitive return.

Research from McKinsey has found a clear link between diversity of corporate leadership and company financial performance. A study of more than 1,000 companies in 12 countries found that firms in the top quartile for gender diversity were 21% more likely to experience above-average profitability than companies in the bottom quartile. Diverse leadership helps attract new talent, improve the quality of decision-making, and encourage innovation, the study found.

By supporting both female leaders and the bottom line, efforts like these are likely to be of interest to investors of all stripes.


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