The role of gender in CEO succession

By Chris Groening *

(exechange) — April 1, 2020 — This issue of exechange news focuses, among others, on two CEO changes. First, Jim Taiclet left American Tower Corp., with Thomas Bartlett taking over his role. Second, David Abney left United Parcel Service Inc. and is being replaced by Carol Tomé.

In the first case, a male is replacing a male, whereas in the second case, a male is being substituted with a female.

The question is whether a change in gender plays a role in CEO succession and subsequent firm performance.

In other words, does the gender change exacerbate the disruption in the CEO succession process?

Research by Yan Zhang and Hongyan Qu indicates that changes in CEOs that are accompanied by a gender change from male to female CEO are accompanied by lower return-on-assets (ROA) and a shorter tenure for the succeeding female CEO (1).

This research found that factors such as the presence of women on the board of directors mitigated these negative outcomes.

Of course, applying research that examined 3,320 CEO successions to the two highly specific CEO changes at American Tower and UPS is not entirely appropriate.

In addition, extraordinary events such as the Covid-19 pandemic compound generalizations further.

However, there may be more complications at UPS than American Tower because the CEO succession involves a change in gender.

(1) Zhang, Y. and Qu, H., 2016. The Impact of CEO Succession with Gender Change on Firm Performance and Successor Early Departure: Evidence from China’s Publicly Listed Companies in 1997-2010. Academy of Management Journal, 59(5), pp.1845-1868.

* The writer is an Associate Professor of Marketing at Kent State University. He researches the financial impacts of corporate social responsibility.

Editor’s note: This is a guest post.