Gender and Executive Job Mobility: Evidence from Mergers and Acquisitions

While the obstacles women face in moving up the organizational hierarchy (captured in the popular metaphor of the “glass ceiling”) have been well studied, much less attention has been paid to understanding the circumstances women face after they reach senior managerial positions. This omission is notable because senior managers are in a different category from other employees: They tend to have substantial work histories and social and industry networks that could largely shield them from gender bias. Yet, it may be precisely in the context of leadership and authority that gender bias might be most evident.

We examine gender differences in managerial job mobility by focusing on senior managers displaced (almost 90 percent) when their firms are acquired. This setting allows us to compare labor market outcomes for similarly-ranked male and female managers, from the same target firms and within the same functional area, who are displaced under similar circumstances. Our results point to a significant (implicit) “gender penalty” for women in terms of managerial job mobility but also indicate contexts in which the penalty may be alleviated and even reversed.

Women make up about 48 percent of the American workforce, but their representation decreases considerably as one moves up the corporate ladder. While there is consensus around the idea that “the higher you go, the fewer women you find,” there is less agreement on the causes – supply or demand – underlying this gender gap. The supply-side argument holds that men and women make different job choices and exhibit different workplace behaviors due to differences in human capital and socialization (Card, Cardoso, & Kline, 2016). The demand-side argument posits that widespread biases hinder career opportunities for women relative to men (Cotter, Hermsen, Ovadia & Vanneman, 2001). Both are likely true to some extent. Consequently, the key question for researchers is not whether there are gender differences in the labor market (which there certainly are), but whether men and women fare differently after accounting for gender differences in preferences and aspirations.

Some believe that, by the time people get to senior management positions, they have accumulated substantial work histories and social and industry networks that could largely insulate them from gender bias. Others argue that substantial overlap exists between the qualities associated with being a manager and male (“Think Manager Think Male” (TMTM) effect; Schein, Mueller, Lituchy, & Liu, 1996), but not between being a manager and female. This perceived mismatch between the attributes associated with managers and those typically ascribed to women is seen as a major problem for women aspiring to move up in the corporate world.

To examine gender differences in job mobility among managers, we use the Securities Data Company (SDC) database to identify publicly traded U.S.-based targets of successful mergers with an effective date between 2000 and 2017. For our main analysis, we consider acquisitions in which the target is fully absorbed by the acquirer (44 percent of the total M&A sample). This sample contains1,003 mergers with 7,079 managers, 1,106 of them female. In this sample, 88.6 percent of the target firm managers are let go post-acquisition. There is no gender difference among managers who remain with the acquirer post-acquisition, which alleviates concern that male and female managers exit for different reasons.

We assess managerial job mobility (defined as, promotion, demotion, and lateral moves) based on changes in hierarchical level. For our main analysis, we generate a hierarchy of managerial ranks using total compensation. We also generate three other measures to capture job mobility, two of which use compensation information and one where hierarchy is constructed independent of compensation (see Gayle, Golan, & Miller, 2012).

We estimate regression models in which job mobility is regressed on manager gender and various other attributes of the manager and the firm. The regressions are estimated with target fixed-effects in addition to the manager rank and function fixed effects, so that the gender indicator estimates the difference in outcomes between male and female managers drawn from the same target firm, function, and rank. Results reveal a greater decline in post-M&A rank for female managers by about 0.53 ranks compared to men. Since the unconditional decline in rank averages 0.82 points for managers in general, an additional decline of 0.53 represents an effect close to 65 percent higher for women. Our results are robust to using propensity score matching wherein each female manager in the sample is matched to a male manager with the closest value on the propensity score. We also look at the effect of the merger on compensation and find that compensation drops significantly more for women managers post-M&A.

We examine differences in the revealed preferences of male and female managers in their search for new positions. Perhaps women are less likely to go back into the labor market after the acquisition. We find that the proportion of men and women working in managerial roles after the acquisition is not significantly different. There are no gender differences in the amount of time managers take to find their next job or in the geographical distance to their new job post-M&A. Both genders are equally likely to find jobs outside the industry where they worked at the time of the merger. Male and female managers in our sample have similar-sized networks, and, similar work experience and are equally likely to be retained by the acquirer after the merger. We also find that male and female managers from target firms are equally likely to find their next jobs in private firms and in firms of similar size and performance. Finally, target-firm male and female managers do not differ on general managerial ability, measured using Custodio, Ferreira, and Matos (2013), which should ease concerns that difference in skills and experience accounts for differential labor market demand for male and female managers. Taken together, these findings provide evidence that our results are not driven by supply-side factors (that is, measurable differences in preferences and ability between male and female managers).

Some acquisitions may result in different outcomes for male and female executives simply because of gender differences in who helms the firm at the time or shrewd negotiations with the acquirer. We find evidence for greater drop in rank for female managers if we (a) drop top-3 ranked target firm managers from the sample as they are most likely to affect the M&A outcomes; (b) drop managers who get jobs within three months from the merger as such cases may reflect voluntary job mobility; (c) drop target firm managers hired at the acquiring firm; (d) use information about toeholds to classify mergers as more or less hostile, with the logic that when the acquirer has a toehold in the target, resistance to the acquisition is more difficult, which weakens the negotiating position of target firm managers.

It is possible that firms run predominantly by males (the vast majority of U.S. public firms) find it more difficult to evaluate women. We examine whether gender differences in job mobility are alleviated when the hiring firm has more women in top management and on boards of directors. The evidence is generally supportive: Having more women in top management reduces the gender gap in job mobility, though more women on corporate boards has no significant effect. Female managers are less likely to suffer a loss of rank and compensation when their new employment is at firms that have substantial female presence in senior management or are helmed by a female CEO. We also find that if the target firm is in a male-dominated industry, women managers are more likely to suffer a greater drop in rank after the merger.

Do decision-makers deliberately discriminate against women managers? We find evidence that in the new (hiring) firm, female managers recruited from M&A targeted firms are more likely to be promoted compared with their male colleagues as well as other women managers. We also find that females with high levels of managerial experience, or those that serve on external boards, do not suffer a gender penalty. Finally, among executives high on general managerial ability, no gender differences are found in job mobility; however, among executives lower on general managerial ability, females see a greater drop in rank post-acquisition compared with males. These findings are consistent with the idea that women have to demonstrate ability and skills to be considered as competent as men, which points toward an implicit bias against women managers.

Overall, our research indicates substantive gender differences in managerial job mobility and that women are at a disadvantage in the executive labor market compared with men. The different outcomes for male and female executives seem to be driven by implicit gender biases that are alleviated in female-friendly firms and when women managers show strong competence and experience. Our research suggests that having women in leadership positions, particularly top management roles, reduces gender bias in hiring outcomes. Since our research was conducted in the context of large U.S.-based public firms, the extent to which findings can be applied to other populations (e.g., smaller public firms in the U.S. or public firms in other countries) needs to be empirically examined.

This post comes to us from professors Vishal K. Gupta and Sandra Mortal at the University of Alabama, Vikram K. Nanda at the University of Texas at Dallas, and doctoral student Xiaohu Guo at the University of Alabama. It is based on their recent article, “Gender and Executive Job Mobility: Evidence from Mergers and Acquisitions,” available here.