Year: 2015
Type: article
Abstract: ABSTRACT This paper shows that CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a hand‐collected sample of 3,365 CEO turnovers from 1993 to 2009, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry and, to a lesser extent, after bad market performance. A decline in industry performance from the 90thto the 10thpercentile doubles the probability of a forced CEO turnover.
Source: The Journal of Finance
DOI: 10.1111/jofi.12282
Authors: DIRK JENTER, FADI KANAAN
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2154984633