Timely vs. delayed CEO turnover

Kuntara Pukthuanthong, Saif Ullah (), Thomas J. Walker and Xuan Wu
Additional contact information
Kuntara Pukthuanthong: University of Missouri
Saif Ullah: Concordia University
Thomas J. Walker: Concordia University
Xuan Wu: Concordia University

Information Systems Frontiers, 2017, vol. 19, issue 3, No 5, 469-479

Abstract: Abstract This paper investigates changes in company performance following timely versus delayed CEO resignations due to financial wrongdoings. A timely resignation is proactively pushed by the company, and a delayed resignation is driven by investigations initiated by the SEC or other regulatory authorities. Our results show significant negative abnormal returns following the announcement of CEO resignations. In addition, compared with timely resignations, delayed resignations experience a larger and longer lasting negative stock market reaction. This suggests that CEO resignations due to financial wrongdoings are not perceived as good news by investors, and the delayed resignations could make investors lose more confidence, possibly because of worries about the ineffective corporate governance and supervision mechanism. We have found a significant negative relationship between CEO-chairman duality and the timeliness of CEO resignations. Our results have important implications for investors and policy makers.

Keywords: Duality; Financial wrongdoing; CEO turnover; CEO resignations (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10796-017-9754-2

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