Shine Bright Like a Diamond: When Signaling Creates Glass Cliffs for Female Executives

There is mixed support for the glass cliff hypothesis that firms will more likely appoint female candidates into top management positions when in crisis. We trace the inconsistent findings back to an underdeveloped theoretical link and deficient identification strategies. Using signaling theory, we suggest that crisis firms appoint female top managers to signal change to the market and argue that the effect is context-dependent. In a field study of 26,156 executive appointments in U.S. firms between 2000 and 2016, we exploit a regression discontinuity to test for the causal impact of firm crisis status on the likelihood of female top management appointments and for moderators of the effect. We find that crisis status leads to a significant increase in female top management appointments and that crisis (vs. noncrisis) firms are more likely to frame female appointments as change-related in press releases. Importantly, the presence of the glass cliff effect hinges on attributes of the signaler (absence of another female executive), signal (appointment type), and receiver (investor attention). The findings robustly evidence the glass cliff and our theoretical extensions.