The purpose of this paper is to examine, within a succession framework, the impact of the gender composition of boards of directors on the gender of the CEOs they appoint, and to assess the impact of newly appointed CEOs' gender on risk taking by the firm.
The authors estimate a two‐stage least squares regression using data on 679 CEO successions in North American firms.
The results show that successor CEOs are more likely to be female the greater the percentage of females on the board, regardless of other succession characteristics such as whether the new CEO is from inside or outside the firm. Furthermore, a change in CEO from male to female is associated with a decrease in several measures of firm risk taking.
The sample is restricted to relatively large, exchange‐traded North American firms and may not generalize to other groups.
The findings suggest that women aspiring to CEO positions and firms wishing to promote women should monitor board composition to ensure female representation. Other steps that the firm may take to promote women to this position (such as looking outside the firm) have an insignificant impact when board composition is taken into account.
The findings are novel and inform CEO succession research by demonstrating which succession process characteristics work to increase females' chances and which have no effect. Female CEOs are likely to provide leadership that reduces the risk profile of the firm.
