Gender Change Increases Likelihood of New CEO's Departure

A new study suggests that CEO succession with a gender change may amplify the disruption of the succession process and thus affect company's performance. Strategic management experts at Rice University and the Central University of Finance and Economics in Beijing used data from 3,320 CEO successions in companies listed on China's Shanghai and Shenzhen stock exchanges from 1997 to 2010 to carry out the study.

"Our findings demonstrate the disruptive impact of CEO succession with gender change, particularly in the case of male-to-female succession," said lead author Yan Anthea Zhang, the Fayez Sarofim Vanguard professor of strategic management at Rice University's Jones Graduate School of Business.

The study found the dynamics of gender change also increases the likelihood of the new CEO's early departure.

"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. While the empirical context is Chinese, the issue should be of interest to companies in the US," Yan said.

The number of companies listed on China's Shanghai and Shenzhen stock exchanges increased from 720 in 1997 to 2,100 in 2010. The proportion of female CEOs in these firms was 4.6 percent in 1997 and rose to 5.6 percent in 2010, which is higher than the proportion of female CEOs in the publicly listed companies in the US.

"The findings can also help us better understand CEO succession and women executive leadership in the world's second-largest economy." The study was co-authored by Hongyan Qu, an assistant professor at the Central University of Finance and Economics in Beijing.

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Yan and Hongyan also found that 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 in post-succession performance.

It may also eliminate the positive impact of male-to-female succession on the likelihood of a successor's early departure. The study findings will be published in the Academy of Management Journal.

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Source-IANS