Search results

1 – 10 of over 7000
To view the access options for this content please click here
Book part
Publication date: 1 November 2008

Atreya Chakraborty and Shahbaz Sheikh

This study investigates the impact of corporate governance mechanisms on performance related turnover. Our results indicate that smaller boards and institutional block…

Abstract

This study investigates the impact of corporate governance mechanisms on performance related turnover. Our results indicate that smaller boards and institutional block holders are positively related to the likelihood of performance related turnover. CEOs that also hold the position of the chairman of the board or belong to a founding family face lower likelihood of turnover. CEO stock ownership is negatively related to turnover and CEOs who own 3 percent or more of their company stock face a significantly lower likelihood of performance related turnover. Moreover, protection from external control market has no effect either on the likelihood of turnover.

Details

Institutional Approach to Global Corporate Governance: Business Systems and Beyond
Type: Book
ISBN: 978-1-84855-320-0

To view the access options for this content please click here
Article
Publication date: 31 July 2009

Shane van Dalsem

The purpose of this paper is to investigate the effect of executive severance contract maturity policies on the likelihood of forced turnover and the length of tenure for…

Abstract

Purpose

The purpose of this paper is to investigate the effect of executive severance contract maturity policies on the likelihood of forced turnover and the length of tenure for CEOs who are forced from their positions.

Design/methodology/approach

The paper utilizes logistic and accelerated failure time models to test the hypothesis that severance contracts decrease information asymmetries resulting in an increased likelihood of forced turnover and a shortened tenure for those CEOs who are forced out.

Findings

The results provide evidence that fixed‐term severance contracts increase the likelihood of forced tenure and decrease the length of tenure for CEOs who experience a forced turnover during the period, while time‐independent contracts do not.

Research limitations/implications

The limitation is the possibility that an omitted variable jointly determines the likelihood of the presence of a severance contract and the effect on forced turnover. Future research should investigate other possibilities beyond the CEO coming from outside of the firm.

Practical implications

The findings confirm that the maturity policies of severance contracts affect forced turnover. The results suggest that there may be a benefit in designing severance contracts to expire to encourage more efficient turnover of underperforming CEOs.

Originality/value

This paper contributes to the empirical corporate finance and accounting literature by differentiating between forced and unforced turnover when analyzing the effects of severance contracts and demonstrating that the time dimension of severance contracts may provide the desired result of encouraging the identification of CEO‐firm mismatches.

Details

Managerial Finance, vol. 35 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

To view the access options for this content please click here
Book part
Publication date: 13 August 2018

Hsin-yi (Shirley) Hsieh, Jian Cao and Mark Kohlbeck

Purpose – We investigate the impact of CEO turnover on performance and accounting-based outcomes following major business restructurings.Design/Methodology/Approach – We

Abstract

Purpose – We investigate the impact of CEO turnover on performance and accounting-based outcomes following major business restructurings.

Design/Methodology/Approach – We analyze a sample of 217 major operational restructurings during the period 1999–2007 using regressions and other statistical tests.

Findings – We document significant improvements in postrestructuring operating and investment efficiencies with little differentiation between restructurings that involve a change in CEO and those that involve continuing CEOs. However, we find evidence of lower accounting quality for the continuing CEO firms. First, restructuring charges of CEO turnover firms are associated with lower current period unexpected core earnings and higher future period unexpected core earnings (lower levels of classification shifting). Second, CEO turnover firms have a significantly lower percentage of (i) restructuring charge reversals and (ii) prereversal shortfalls (in meeting analyst forecast estimates) followed by reversals (suggesting lower levels of subsequent earnings management). Therefore, turnover CEOs are less likely to manipulate restructuring charges to mask true economic performance than continuing CEOs. Overall, our evidence suggests continuing CEOs undertake less substantial restructurings, while opportunistically reporting similar charges and performance improvements, consistent with attempts to pool with new CEO hires to keep their jobs.

Originality/Value – Overall, our results highlight the key economic role played by top corporate managers in major business restructurings, suggesting that CEO turnover leads to both real changes in managerial actions and altered reporting incentives.

To view the access options for this content please click here
Article
Publication date: 13 September 2013

Nana Yamfo Amoah

The purpose of this study is to investigate the relation between the size of the legal penalty for fraud and CEO turnover.

Downloads
552

Abstract

Purpose

The purpose of this study is to investigate the relation between the size of the legal penalty for fraud and CEO turnover.

Design/methodology/approach

Using a sample of 93 securities lawsuits that were filed in the US between 1997 and 2005, logit regression is used in the analysis of the relation between probability of CEO turnover and size of the litigation monetary penalty and ordinal logit regression is used to examine the relation between timing of CEO turnover and size of the litigation monetary penalty.

Findings

A positive association is documented between the size of the monetary penalty and the probability of CEO turnover. A larger monetary penalty is associated with earlier CEO turnover. Equity issue related securities lawsuit is associated with a higher probability of CEO turnover and an earlier CEO turnover.

Research limitations/implications

The results imply that the greater the legal penalty levied on the sued firm, the more likely the CEO is considered as being complicit in the alleged fraud. A limitation of this study is that in constructing the sample, some meritorious lawsuits that may have resulted in legal penalty but were dismissed for procedural reasons were excluded. Further, the CEO turnover data did not provide sufficient information about the reason for the termination of the CEOs.

Originality/value

This is one of the first empirical studies to examine the relation between the legal penalty for fraud and CEO turnover in the period after the Private Securities Litigation Reform Act. This study adds to the existing literature on the consequences of financial misreporting on managers by documenting an association between the legal penalty for fraud and CEO turnover.

Details

Journal of Accounting & Organizational Change, vol. 9 no. 3
Type: Research Article
ISSN: 1832-5912

Keywords

To view the access options for this content please click here
Article
Publication date: 7 May 2019

Juan Wang

The purpose of this paper is to investigate the effect of long horizon institutional ownership on CEO career concerns to meet the short-term earnings benchmark.

Abstract

Purpose

The purpose of this paper is to investigate the effect of long horizon institutional ownership on CEO career concerns to meet the short-term earnings benchmark.

Design/methodology/approach

Using a sample of 10,565 firm-year observations in the USA, the paper examines the extent to which long horizon institutional investors mitigate the positive relation between CEO turnover and missing the quarterly consensus analyst forecast.

Findings

After controlling for the general performance-turnover relation, this paper finds that long horizon institutional investors mitigate the positive relation between CEO turnover and missing the quarterly consensus analyst forecast. This finding is stronger when CEOs focus on long-term value creation and do not sacrifice long-term value to boost current earnings and is stronger when the monitoring intensity by long horizon institutional investors is greater.

Research limitations/implications

The results suggest that long horizon institutional investors serve a monitoring role in alleviating CEO career concerns to meet the short-term earnings benchmark.

Originality/value

This paper contributes to the literature on the relation between long horizon institutional ownership and attenuated managerial short-termism. The literature is silent about why long horizon institutional investors alleviate managerial short-termism. This paper fills this void in the literature by documenting that long horizon institutional investors mitigate CEO career concerns for managerial short-termism. Moreover, this paper contributes to the literature on the monitoring role of institutional investors by documenting the incremental effect of institutional ownership on CEO career concerns to meet the short-term earnings benchmark.

Details

International Journal of Accounting & Information Management, vol. 27 no. 2
Type: Research Article
ISSN: 1834-7649

Keywords

To view the access options for this content please click here
Article
Publication date: 8 May 2017

Elizabeth Cooper

The purpose of this paper is to explore the research question whether corporate social responsibility (CSR) and gender influence the likelihood of CEO turnover.

Downloads
2358

Abstract

Purpose

The purpose of this paper is to explore the research question whether corporate social responsibility (CSR) and gender influence the likelihood of CEO turnover.

Design/methodology/approach

The author uses a large sample of firms over a 21-year period from 1992 to 2013 taken from firms cross-listed in the ESG STATS, Execucomp, and Compustat databases. Logistic regression is used to analyze the determinants of both CEO turnover and the gender of the newly hired CEO.

Findings

Firms with better social performance have higher rates of CEO turnover, performance notwithstanding. Further, for firms with decreasing financial performance, it is more likely they will replace their CEO if they have strong CSR vs firms with weak CSR records. In addition, as performance deteriorates, male CEOs will have a higher chance of being replaced relative to female CEOs. For female CEOs, other factors besides financial performance are important determinants of the likelihood of a turnover taking place.

Research limitations/implications

This study finds support for the stakeholder theory of CSR and does not support entrenchment theory. It is the first study to look at CSR, CEO turnover, and gender issues concurrently.

Practical implications

For practitioners looking for tangible effects of CSR in the workplace, this paper provides evidence that it does matter in terms of CEO turnover. The findings suggest that CSR is acting as a deterrent to bad behavior on the part of executives in the face of weak financial performance in particular.

Originality/value

This study is the first to look at the impact of CSR on CEO turnover. Importantly, the findings suggest that CSR is not something that a firm decides or thinks about in the “right” financial environment but is rather an omnipresent focus embedded within the mission of the firm.

Details

Managerial Finance, vol. 43 no. 5
Type: Research Article
ISSN: 0307-4358

Keywords

To view the access options for this content please click here
Article
Publication date: 23 November 2010

Judy K. Land

This paper aims to examine whether restatement firms with certain restatement characteristics are more likely to have chief executive officer (CEO) turnover within a year…

Downloads
1677

Abstract

Purpose

This paper aims to examine whether restatement firms with certain restatement characteristics are more likely to have chief executive officer (CEO) turnover within a year of the restatement announcement, and whether these same firms are later subject to regulatory action by the US Securities and Exchange Commission.

Design/methodology/approach

The empirical analysis uses a logistic regression to test a sample of firms that restated earnings during the years 1996‐1999.

Findings

The results show significant associations between measures of the severity of earnings restatement and the probability of CEO turnover. Also, restatement firms with CEO turnover are more likely to be issued an SEC Accounting and Auditing Enforcement Release in the years after the restatement, indicating that financial fraud has occurred.

Research limitations/implications

The results may not generalize to a more recent time period because the sample of firms is from the 1996‐1999 time period.

Originality/value

This study provides a link between CEO turnover and restatement characteristics within a sample of restatement firms.

Details

Pacific Accounting Review, vol. 22 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

To view the access options for this content please click here
Article
Publication date: 23 March 2012

Lindrianasari and Jogiyanto Hartono

The purpose of this paper is to examine the usefulness of accounting and market information when considering the issue of CEO turnovers in Indonesia.

Downloads
1146

Abstract

Purpose

The purpose of this paper is to examine the usefulness of accounting and market information when considering the issue of CEO turnovers in Indonesia.

Design/methodology/approach

The samples used in this research were corporations identified to have undergone (routinely or non‐routinely) top management turnovers (which in this case were President Directors). This study used samples from all corporations that experienced CEO turnover during the period of 1998‐2006 and determined the accounting variables that were thought to explain the turnovers. Corporations that did not experience CEO turnovers throughout the observed period were used as the control group. The final samples for both data sources were decided after considering data availability and confounding effects within the period of observation and were tested by using the LOGIT (separately) model, due to the fact that the dependent variables used were binary variables: 1 for turnover and 0 for no‐turnover.

Findings

The overall results indicated that decreasing accounting and market performance within a company, in an average period of three years, encouraged CEO turnovers.

Research limitations/implications

This paper did not take into account the wider reasons for turnovers, such as CEOs hitting pension age (retirement), death, or forced or voluntary turnovers, all of which in previous research were areas that showed considerable influence. In future research, it would be important to consider those characteristics, along with the personalities of the CEOs who left the firms and those who were brought in.

Practical implications

Owners of firms have to be careful when making decisions to turnover CEOs because the action can generate significant reactions from the market. This market reaction, of course, is the factor that influences the prosperity of the company.

Originality/value

This paper demonstrates that when accounting and market performance is good, the probability that the presiding CEO will not be fired is higher, and vice versa.

Content available
Article
Publication date: 17 August 2021

Esteban Lafuente and Miguel A. García-Cestona

This paper investigates how past performance changes, prior CEO replacements and changes in the chairperson impact CEO turnover in public and large private businesses.

Abstract

Purpose

This paper investigates how past performance changes, prior CEO replacements and changes in the chairperson impact CEO turnover in public and large private businesses.

Design/methodology/approach

We analyze 1,679 CEO replacements documented in a sample of 1,493 Spanish public and private firms during 1998–2004 by computing dynamic binary choice models that control for endogeneity in CEO turnovers.

Findings

The results reveal that different performance horizons (short- and long-term) explain the dissimilar rate of CEO turnover between public and private firms. Private firms exercise monitoring patience and path dependency characterizes the evaluation of CEOs, while public companies' short-termism leads to higher CEO turnover rates as a reaction to poor short-term economic results, and alternative controls—ownership and changes in the chairperson—improve the monitoring of management.

Originality/value

Our results show the importance of controlling for path dependency to examine more accurately top executives' performance. The findings confirm that exposure to market controls affects the functioning of internal controls in evaluating CEOs and shows a short-term performance horizon that could be behind the recent moves of public firms going private or restraining shareholders' power.

Details

Journal of Economics, Finance and Administrative Science, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2077-1886

Keywords

To view the access options for this content please click here
Article
Publication date: 31 May 2021

Renhuai Liu, Chao Li and Mengjun Huo

The purpose of this paper is to empirically analyze the impact of chief executive officer (CEO) turnover on strategic change and explore the mediating role of…

Abstract

Purpose

The purpose of this paper is to empirically analyze the impact of chief executive officer (CEO) turnover on strategic change and explore the mediating role of organizational slack between them, as well as the moderating role and joint moderating role of top management team (TMT) external social network, ownership nature and industry type.

Design/methodology/approach

Based on the upper echelons theory, resource allocation theory and structuration theory, this paper takes the unbalanced panel data of A-share listed companies in Shanghai and Shenzhen Stock Exchanges of China from 2001 to 2018 as the research sample, uses ordinary least squares (OLS) regression method and fixed effect model to study the relationship between CEO turnover and strategic change, and focuses on the mediating mechanism and moderating mechanism between them.

Findings

The authors find that CEO turnover is positively related to strategic change. When a CEO turns over, a new CEO will initiate strategic change. Precipitation organizational slack plays a mediating role between CEO turnover and strategic change. Non-precipitation organizational slack has no mediating effect between CEO turnover and strategic change, which is embodied as “suppressing effects.” When the non-precipitation organizational slack variable is controlled, the impact of CEO turnover on strategic change will be enhanced. TMT external social network, ownership nature and industry type all negatively moderate the relationship between CEO turnover and strategic change. TMT external social network and ownership nature have a joint moderating effect between CEO turnover and strategic change. When TMT external social network is small, CEO turnover has a positive effect on strategic change in both state-owned enterprises and non-state-owned enterprises, but the promotion effect is stronger in non-state-owned enterprises. When TMT external social network is large, the positive effect of CEO turnover on strategic change in state-owned enterprises is from strong to weak, but in the non-state-owned enterprises is from weak to strong. TMT external social network and industry type have a joint moderating effect between CEO turnover and strategic change. When TMT external social network is small, CEO turnover has a positive impact on strategic change in high-tech enterprises and non-high-tech enterprises, but the promotion effect is stronger in non-high-tech enterprises. When TMT external social network is large, the positive impact of CEO turnover on strategic change in high-tech enterprises is from strong to weak, but in the non-high-tech enterprises is from weak to strong.

Originality/value

On the basis of previous studies, this paper further expands the research scope of the mechanism of CEO turnover on strategic change, echoing the research arguments of relevant scholars. At the same time, the research results reveal the mechanism of organizational slack, TMT external social network, ownership nature and industry type in the relationship between CEO turnover and strategic change, and further deepen the application of upper echelons theory, resources allocation theory and structuration theory in China. In addition, the research conclusions of this paper also provide reference value for Chinese enterprises in carrying out strategic change, promoting enterprise transformation and improving the level of corporate governance, and help to enhance the understanding and attention of Chinese enterprises to CEO turnover, organizational slack, TMT external social network, strategic change and corporate governance under the background of high-quality economic development.

Details

China Finance Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-1398

Keywords

1 – 10 of over 7000