The Forced Turnover Effect on an Overconfident CEO: Evidence From Taiwan-Listed Firms

Cho-Min Lin, Ming-Chung Chang and Yi-Hui Chao

SAGE Open, 2022, vol. 12, issue 1, 21582440221079915

Abstract: This research focuses on investigating the reasons why an overconfident chief executive officer (CEO) is forced to leave by examining CEO turnover observations from 463 Taiwan-listed companies over the period 2008 to 2016 and using the Cox semi-parametric proportional hazard model to test the reasons for CEOs being laid off. The empirical result shows that overconfidence increases a CEO’s forced turnover risk, but this risk is not significant for an overconfident CEO in a company with a high proportion of controlling shareholders on the board. In addition, an overconfident CEO’s forced turnover risk decreases when he/she has strong business and management ability. This paper contributes to the literature by demonstrating the relationship between a CEO’s forced turnover risk and control-affiliated directors as well as the CEO’s ability.

Keywords: overconfidence; forced turnover risk; control-affiliated directors; CEOs’ ability (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:12:y:2022:i:1:p:21582440221079915

DOI: 10.1177/21582440221079915

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