Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123425
Authors: 
Kind, Axel
Schläpfer, Yves
Year of Publication: 
2011
Series/Report no.: 
WWZ Discussion Paper 2011/10
Abstract: 
To gain insights about the quality of board's firing decisions, we investigate abnormal stock returns and operating performance around CEO-turnover announcements in a new hand- collected sample of 208 “clean” turnover events between January 1998 and June 2009. Unlike the majority of previous studies, we show that forced turnovers do not per se represent a positive signal to hareholders. On the contrary, investors seem to critically assess the board's firing decision by considering the quality of the departing manager. When an outperforming CEO is dismissed or forced to leave - an event that occurs in as many as 35% of all dismissals in our sample - shareholders disesteem the board's decision. This finding is confirmed in multivariate cross-sectional regressions, holds for different time subperiods, and is robust to various event-test specifications and proxies of CEO quality.
Subjects: 
CEO turnover
Corporate governance
Firm performance
JEL: 
G14
G30
G34
Document Type: 
Working Paper

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