Vaasan yliopiston opinnäytteet

Kauppatieteellinen tiedekunta, 2016

Hämäläinen, Heikki

Market Reaction towards CEO Appointments: Do Executive Gender and Age Matter?

Ohjaaja/Valvoja (DI):
Sami Vähämaa
Kauppatieteiden maisteri
Laskentatoimi ja rahoitus
Master's Degree Programme in Finance
Tutkielman kieli:
The purpose of the thesis is to study how the market reacts to a CEO appointment. Furthermore, it aims to find whether the executive gender or age of the CEO has an impact on the evaluation by market participants. The study will present the irrationality of investor by how they might discriminate the executive candidates by their demographic factors. The study is done in the U.S. market and the timeline is from year 2006 to 2015. The data considering the appointments is collected from ExecuComp and the exact announcement dates of the appointed CEOs are from American Business Journals, such as Wall Street Journal and Business Wire. The historical stock and index prices are collected from Yahoo Finance.

The thesis first presents the research problem and studies related to it. First, it presents studies considering the discrimination towards demographically different people. Secondly, it presents studies about how the CEO of the company affects the stock price and the financial performance of the company. One purpose of the study is to combine the two phenomena. The effect of the CEO has on financial performance of the company has been researched a lot, but the fact how investor perceive demographically different executives to lead the company, has not gotten enough attention.

Previous studies of the subject have found contradictory results. Mostly the results have shown the investor to react more negatively on female executives. The study tries to find whether the “glass ceiling” still exist and have the people become less conservative since the last researches of the subject.

The thesis leads to a conclusion that the “glass ceiling” and the discrimination towards demographically different executives does not exist anymore. The investors do not react more negatively to appointed female CEOs compared to male peer candidates. In addition, the research does not find a significant difference between the reaction by investors towards appointments of differently aged CEOs.
CEO, appointment, discrimination, gender, age
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