The Cadbury Committee, Corporate Performance, and Top Management Turnover

Jay Dahya, John J. McConnell and Nickolaos G. Travlos

Journal of Finance, 2002, vol. 57, issue 1, 461-483

Abstract: In 1992, the Cadbury Committee issued the Code of Best Practice which recommends that boards of U.K. corporations include at least three outside directors and that the positions of chairman and CEO be held by different individuals. The underlying presumption was that these recommendations would lead to improved board oversight. We empirically analyze the relationship between CEO turnover and corporate performance. CEO turnover increased following issuance of the Code; the negative relationship between CEO turnover and performance became stronger following the Code's issuance; and the increase in sensitivity of turnover to performance was concentrated among firms that adopted the Code.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:57:y:2002:i:1:p:461-483

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