Women, racialized CEOs outperform white men: report

Firms led by women and racialized chief executives financially outperform those led by white men, according to a new report. 

That’s because of the discriminatory barriers the first group of candidates must clear to reach the C-suite, not because of any inherent leadership advantage, it says.

Researchers Sandra Betton and Gillian Leithman of Concordia University, Rahul Ravi of Concordia's John Molson School of Business, and Sonal Kumar of Bryant University analysed 11,605 firm-year observations of large, publicly traded U.S. companies from 1998 to 2013. 

They found an "ordered performance gradient": non-white women CEOs performed best, followed by white women, then non-white men, with white men — 86.6 to 89.1% of CEOs across the sample — at the bottom.

Previously, Canada placed 15th in a list of countries with the highest number of female CEOs.

‘Discriminatory barriers’ bring out the best

"Discriminatory barriers may filter out all but the most exceptional women and non-white candidates before they reach the C-suite, producing this same performance pattern regardless of whether any underlying ability differences exist," Betton, Kumar, Leithman and Ravi wrote in the paper.

The researchers also found minority CEOs were disproportionately appointed during company downturns, a pattern they say fits "glass-ceiling and glass-cliff effects" better than self-selection.

Performance gains were concentrated specifically in transitions toward minority CEOs; reverse transitions showed no significant improvement.

"Reading an observed performance gap as proof of a fixed, inherent trait, in either direction, risks mistaking a selection process for a fixed destiny," the authors wrote.

Do minority CEOs save the day?

The study drew CEO and board data from the Institutional Shareholder Services database and firm performance data from Compustat, using return on assets and Tobin's Q as its measures. CEO ethnicity required hand-collection, since neither database reports it as a standard field.

To test whether appointment timing tracked firm distress, the authors ran a logistic regression comparing the likelihood of hiring an occupational-minority CEO against average return on assets in the two and three years before the transition. Both coefficients were negative and statistically significant, indicating minority CEOs were more likely to be brought in as performance was already declining.

The authors also ran a propensity-matched sample and a difference-in-differences analysis of CEO turnovers, testing whether stronger firms simply prefer appointing women and non-white executives. Firms transitioning from a white male CEO to a woman posted a 2.8% rise in return on assets; white-to-non-white transitions produced a 1.3% rise, while reverse transitions produced no comparable gains.

Some qualities unexamined

Betton, Kumar, Leithman and Ravi write that boards concluding women and racialized executives simply "possess unusual leadership qualities" risk leaving the selection process, including access to networks and sponsorship, unexamined. 

The researchers recommend organisations instead examine "why some candidates have had to clear a higher bar in the first place."

The authors caution their sample, running only through 2013, predates a decade of shifting board-diversity norms. The share of incoming S&P 500 independent directors who were women or from underrepresented groups peaked at 72% in 2021 before falling to 46% by 2025, after the repeal of Nasdaq's board diversity disclosure rule.

Whether the same barriers hold with equal force today is, in the authors' words, "an open empirical question" for future research.

Here are some numbers around women and racialized CEOs in Canada, according to different sources: