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The level of support CEOs receive from members of their organization is critical to their success, but little is known about what drives this support. In this paper, we develop and test theory that explains heterogeneity in the propensity to which employees approve of their CEO's performance. More specifically, we argue that an increase in financial and social firm performance and a CEO conforming to CEO stereotypes improves approval while CEO overcompensation decreases approval. We test our hypotheses using more than one million CEO reviews of listed U.S. companies from glassdoor.com. We also explore heterogeneity in the employees' propensity to approve of the CEO performance and detect that younger, female, and more educated employees are more likely to approve of the performance of their CEOs.
A Social Role Theory Perspective of Managers' and Financial Analysts' Interactions in Earnings Calls
University of Notre Dame Marie Mitchell,
University of Georgia Farhan Iqbal,
University of Georgia
Earnings calls represent one of the most critical events for managers of public firms. Research focuses on managers’ communicative styles and analysts’ subsequent reactions. This approach is problematic because it overlooks the facts that communication in earnings calls is bi-directional (managers respond to prompts) and that both parties involved possess deeply-engrained social expectations that supersede linguistic style. We integrate social role theory to examine how conversations unfold between managers and analysts. We theorize about how analysts’ adherence to social roles may color the ways managers respond to their questions, and how managers’ conformity to these roles may influence analysts’ evaluations. We specifically build off research on the social roles of gender, and we examine how females (males) using agentic (communal) language may elicit unintended responses.
Does CEO Gender Bias Still Exist? Examination of Market Reaction to Female CEO Appointments
Marquette University Junghyun Mah,
Michigan State University Gerry McNamara,
Michigan State University
We conduct a replication and extension of the study by Lee and James (2007) examining the market reaction to female CEO appointments. Using the time period 1990-2000, Lee and James (2007) found that the stock market responded more negatively to female compared to male CEO appointments. We use a longer and more recent time period (2000-2018) and find no evidence of such female CEO bias. However, under conditions where investors expect significant strategic change at a firm, female CEO appointments trigger a negative market reaction. Finally, in a post hoc analysis, we examine whether investors evidence ongoing bias against female CEOs by testing for a gender effect when a firm has a negative earnings surprise and find evidence for such bias against female CEOs.