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New CEO's gender may affect company performance: study

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Google Oneindia News

Washington, Oct 21: A CEO succession with a gender change may adversely affect company performance and increase the likelihood of the new CEO's early departure, according to a new study.

Using data from 3,320 CEO successions in companies listed on China's Shanghai and Shenzhen stock exchanges from 1997 to 2010, the researchers found that companies with male-to-female succession tend to have lower post succession performance than those with same-gender succession.

Office

They also found that both male-to-female succession and female-to-male succession increase the likelihood of the successor's early departure.

"Because CEOs in most companies are men, if gender at the CEO post is to change, the change very likely will be male-to-female," said the study's lead author Yan "Anthea" Zhang, the Fayez Sarofim Vanguard Professor of Strategic Management at Rice University's Jones Graduate School of Business.

"In order to avoid disruption associated with gender change, companies tend to stick to the status quo - that is, they appoint a male successor," she said.

"Therefore, companies' tendencies to avoid such a disruption at least partially contribute to the persistence in gender inequality in corporate leadership positions," she said.

"Our focus on the gender difference between a predecessor and a successor may offer novel insights into some of the social psychological processes surrounding the CEO succession event," Zhang said.

The study was co-authored by Hongyan Qu, an assistant professor at the Central University of Finance and Economics in Beijing. "The relatively large number of female CEOs in the publicly listed firms in China allowed us to examine the role of gender and gender change in the CEO succession process," Zhang said.

The study contributes to a better understanding of female leadership, researchers said. Researchers identified some critical organisational contexts that may reduce the disruption associated with male-to-female succession.

Having other female leaders on a firm's board of directors and top management team may diminish the negative impact of male-to-female succession on postsuccession performance, they said.

It may also eliminate the positive impact of male-to-female succession on the likelihood of a successor's early departure. Moreover, the disruptive effect of male-to-female succession is lower in an internal succession than in an external succession, researchers found.

PTI

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