Female CEOs are more likely than male CEOs to outperform the S&P 500 index, according to a data compilation from Bloomberg Businessweek. However, investors are trying to determine if this tendency to outperform is associated with greater opportunities to do so — since female CEOs are also more likely to take the helm when a company is struggling.
This phenomenon — when women clinch CEO spots during a crisis or economic downturn — is called the "glass cliff," according to Bloomberg, and it's fairly common. Take Yahoo's Marissa Mayer for example. Bloomberg cites a 2015 study from Logan-based Utah State University that showed 42 percent of female CEOs of Fortune 500 companies appointed between 1955 and 2014 took the helm at a rocky time, compared to 22 percent of male CEOs.
Bloomberg's data compilation shows 16 S&P 500 female CEOs have had their job for three years or more, and 12 of those 16 outperformed the index during their tenure. However, within that 75 percent who outperformed the index, 38 percent had negative market returns in their first year on the job or the year before they took over, according to the report.
Karen Rubin, vice president of Quantopian, has also investigated female CEO performance, according to Bloomberg. She is testing an algorithm that buys shares of female-led Fortune 1,000 companies and sells the shares when the female CEO leaves the job. Her results show Fortune 1,000 female CEOs outperformed the S&P 500 by 217 percent from 2002 to 2014, by 197 percent when Yahoo was thrown out, and by 153 percent when consumer companies — a strong sector — were thrown out, according to the report.
The Bloomberg report suggests female CEOs may bring something different to the table that affects market performance, and perhaps diversity at the helm can bring fresh skills to spur turnarounds.
Read the full report here.
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