Are you kidding me?

I am sorry, I meant to say: You have to be kidding me. Analysts seem to be a misogynistic bunch if you believe the results of an analysis by Aharon Mohliver, Anantha Divakaruni, and Laura Fritsch.

They analysed almost 5,000 earnings calls of US companies just before and after a CEO transition. Their goal was to see if analysts treat male and female CEOs differently. As you might have guessed, analysts do treat male and female CEOs differently, but surprisingly only if they fulfill certain gender stereotypes.

To show this, they looked at the amount of uptalk the old and new CEO used. Uptalk is a rise in tonal pitch at the end of a declarative sentence similar to what you hear at the end of a question.

In that respect, I misled you with my headline and the first sentence above, but I didn’t know how else to get your inner voice to rise in one case and not rise in the other. Because, you see, men and women have different ways of speaking with women far more likely to use uptalk at the end of a statement than men.

Indeed, gender differences are so marked and common that not only do we not notice them in everyday life, but transgender men transitioning to become women instinctively start using uptalk more frequently as they transition. I know, I just learned something new as well…

So what happens when equity analysts listen to an earnings call with a male or female CEO? And how does their assessment change when there is a CEO transition from a male to a female CEO or from a female to a male CEO?

The chart below shows a key result from the study, namely the cumulative abnormal return of a company’s stock in the week after the first earnings call by a new incoming CEO. If the incoming CEO is a man, it doesn’t really matter if he uses more uptalk or less uptalk. But if the incoming CEO is a woman, it does.

Use of uptalk by incoming CEO and share price reaction

Source: Mohliver et al. (2024)

If the incoming female CEO uses more uptalk, she comes across to the listener as more feminine and gets punished by a higher chance of an analyst downgrade and corresponding share price drops. If, on the other hand the incoming female CEO uses male intonation and less uptalk, she gets rewarded with a higher chance of analyst upgrades.

It may not have anything to do with the intonation and the use of uptalk but rather with the choice of words and the kind of utterances an incoming CEO makes, but if an incoming female must act like a man (either in intonation or choice of words) to be taken serious by analysts it is a real shame.

I know it is not a conscious bias that equity analysts (most of which are men) have, but still is irritating as hell that there seems to be unconscious bias against female CEOs, at least if this study is correct.