Gendered performance evaluation in CEO turnover

Abstract

I examine gender differences in CEO turnover-performance sensitivity to provide evidence for gendered performance evaluation in leadership positions from a new perspective. Using a large sample of Chinese listed companies from 2010 to 2019, I find that on average the turnover-performance sensitivity of female CEOs is significantly higher than that of their male counterparts, indicating that female CEOs are evaluated more unfavorably when performance declines. By exploring possible moderators of the gendered turnover-performance sensitivity, I observe that gender differences in CEO turnover-performance sensitivity are moderated by gender diversity in upper echelons, female CEOs' informal relationship with board members, CEO tenure, investor attention, and characteristics of controlling shareholders. In addition, below the performance threshold for CEO turnover risk, I document a performance threshold for gender differences in CEO turnover-performance sensitivity, suggesting that the unfavorable performance evaluation of female CEOs is triggered by extreme underperformance. I also find that past performance declines significantly worsen the evaluation of female CEOs' current performance but are immaterial to that of male CEOs. Finally, there are no significant gender differences in the performance threshold for CEO turnover risk, in the direct effect of past performance on the likelihood of current CEO turnover, and in the effect of industry performance on CEO turnover. This study particularly contributes to unraveling the boundary conditions of gender differences in CEO turnover-performance sensitivity and to opening the black box of CEO evaluation process from a gender perspective.