Investment Performance of Female CEOs

//, Academic Research Insight/Investment Performance of Female CEOs

Investment Performance of Female CEOs

Performance of Female CEOs

  • Srinidhi Kanuri, James Malm
  • Journal of Investing, Spring 2018
  • A version of this paper can be found here
  • Want to read our summaries of academic finance papers? Check out our Academic Research Insight category.

What are the Research Questions?

The paper investigates the following research question:
  1. Do firms with female CEOs outperform the market ( proxy by S&P 1500 and Russell 3000)?

What are the Academic Insights?

By analyzing U.S. firms with female CEOs from January 1996 to December 2014 ( as of this date there are 55 firms with women serving as CEOs), the authors find the following:

  1. YES- Firms with female CEOs have higher average monthly and median returns, higher risk-adjusted performance (Sharpe, Sortino and Omega ratios) and significantly positive alphas with both the Carhart four-factor and the Fama-French five-factor model.

Why does it matter?

This study contributes to an emerging body of research on gender and finance. Gender diversity benefits corporations.(1)

The Most Important Chart from the Paper:

The results are hypothetical results and are NOT an indicator of future results and do NOT represent returns that any investor actually attained. Indexes are unmanaged, do not reflect management or trading fees, and one cannot invest directly in an index.


Abstract

The authors examine the performance of companies led by women from January 1996 to December 2014. The results show that companies headed by women outperformed the U.S. market, as proxied by the S&P 1500 and Russell 3000 indexes. Firms with female CEOs have higher average and median monthly returns, higher risk (standard deviation of monthly returns), and higher risk-adjusted performance (Sharpe, Sortino, and Omega ratios). Female-led companies also have significantly positive alphas with both the Carhart four-factor model and the Fama–French five-factor model when they form equally weighted and value-weighted portfolios of these firms. These results indicate that firms led by women have created significant value for their investors during the period of our study.


  • The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. Our full disclosures are available here. Definitions of common statistics used in our analysis are available here (towards the bottom).
  • Join thousands of other readers and subscribe to our blog.
  • This site provides NO information on our value ETFs or our momentum ETFs. Please refer to this site.

References   [ + ]

1.Here is another piece on the subject by Wes
Elisabetta Basilico, PhD, CFA
Dr. Elisabetta Basilico is a seasoned investment professional with an expertise in "turning academic insights into investment strategies." Research is her life's work and by combing her scientific grounding in quantitative investment management with a pragmatic approach to business challenges, she’s helped several institutional investors achieve stable returns from their global wealth portfolios. Her expertise spans from asset allocation to active quantitative investment strategies. Holder of the Charter Financial Analyst since 2007 and a PhD from the University of St. Gallen in Switzerland, she has experience in teaching and research at various international universities and co-author of articles published in peer-reviewed journals. She and co-author Tommi Johnsen are currently writing a book on research-backed investment ideas. You can find additional information at Academic Insights on Investing.
Yes No
This website uses cookies and third party services. Settings Ok

Cookies

We use “cookies” on this site. A cookie is a piece of data stored on a site visitor’s hard drive to help us improve your access to our site and identify repeat visitors to our site. For instance, when we use a cookie to identify you, you would not have to log in a password more than once, thereby saving time while on our site. Cookies can also enable us to track and target the interests of our users to enhance the experience on our site. Usage of a cookie is in no way linked to any personally identifiable information on our site. Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies.

Embedded Content

Articles on this Site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website.These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.