Choosing Sides: CEO Gender and Investor Support for Activist Campaigns

Recent evidence suggests that female-led firms are more likely to be targeted by activist investors. We examine how Chief Executive Officer (CEO) gender influences retail investors’ responses to proxy contests. We find that these investors are more likely to support—through their proxy voting behavior—campaigns that target female-led versus male-led firms, despite the fact that retail investors evaluate female and male CEOs similarly. We show that this apparent discrepancy is a function of how subjective ratings mask stereotype-influenced judgments, consistent with the shifting standards model (SSM). Respondents use lower standards to evaluate female versus male CEOs. This difference becomes apparent when externallyanchored judgments are employed, such as when investors are asked to choose sides in a proxy contest. Correspondingly, activists are judged as relatively more competent when targeting female-led firms. Our findings contribute to research on CEO gender and activism. In doing so, our research also introduces the SSM to the investor decision-making literature, thereby enriching the discussion about what mechanisms underpin the less favorable investment outcomes female-led firms can experience.