While there has been extensive research on understanding the relationship between CEO appointments and stock returns, little is known about the impact on the stock returns after the CEO is dismissed. Furthermore, even less is known about when female CEOs are dismissed due to reasons of performance. Integrating the insights of the “resource-based view,” “role congruity theory,” and “investor sentiment perspective,” we build on the premise that female CEOs are unique resources and hence, the dismissal of female CEOs will be perceived as substantial loss to the organization giving rise to particularly negative market reaction, leading to a lower cumulative abnormal return on the day of the dismissal announcement for female CEOs compared with male CEOs. However, the dismissal of female CEOs, who are dismissed for performance related reasons, will incite a positive market reaction, leading to a higher cumulative abnormal return on the day of the dismissal announcement for female CEOs compared with male CEOs. Using data from 909 CEO dismissals from 1992–2020, we find that the investors’ behavior toward female CEOs’ dismissal is different when they are dismissed due to performance. We contribute to the literature we draw from as well as to the upper-echelon literature uniquely.
