Antecedents and repercussions of CEO dismissals in the US: A glass cliff for women CEOs?

Abstract

The current study builds upon and extends research on the glass cliff by analyzing the antecedents and repercussions of CEO dismissal. Recent research on the relationship between performance, gender, and CEO dismissal has led to contrary conclusions. We build on this nascent work by examining whether negative firm performance places women CEOs of US firms at a greater risk of involuntary dismissal relative to men CEOs. We further explore whether gender moderates market response to the dismissal announcement and replacement. Our analysis relies on data of all CEOs from the United States’ Russell 3000 index, which represents a spectrum of small to large companies, who departed their organizations between 2016 and 2022. We also rely on a novel measure of CEO dismissal, the push-out score, which overcomes previous limitations related to the nature of CEO departures. We find that women are more vulnerable than men to involuntary dismissal during periods of performance decline and that investors reward firms that replace dismissed women CEOs with white men. Our findings have implications for gender equity in the C-Suite.