CEO Turnover and Director Reputation

Felix von Meyerinck, Jonas Romer and Markus Schmid
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Felix von Meyerinck: University of Zurich
Jonas Romer: University of St. Gallen

No 23-87, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This paper analyzes the reputational effects of forced CEO turnovers on outside directors. Directors interlocked to a forced CEO turnover experience large and persistent increases in withheld votes at subsequent re-elections relative to non-turnover-interlocked directors. Reputational losses are larger for turnovers with a higher potential for disrupting a firm's management, for directors favorably inclined to the CEO, and for directors with a committee-based responsibility for monitoring the CEO. Our results imply that the average forced CEO turnover signals a governance failure at the board level, and that shareholders rely on salient actions to update their beliefs about directors' hidden qualities.

Keywords: CEO turnover; director elections; director reputation; CEO succession; shareholder voting (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Pages: 87 pages
Date: 2023-10
New Economics Papers: this item is included in nep-cfn and nep-hrm
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Journal Article: CEO turnover and director reputation (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2387

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