Earnings performance measures and CEO turnover: Street versus GAAP earnings

Henry Jarva, Juha-Pekka Kallunki and Gilad Livne ()

Journal of Corporate Finance, 2019, vol. 56, issue C, 249-266

Abstract: Prior research reports that analysts focus on street earnings, which are measures that typically exceed GAAP earnings. Using a sample of CEO turnovers from 1993 to 2016 we show that the likelihood and speed of forced CEO turnover - but not voluntary turnover - are higher when analysts exclude income-decreasing items. The association between exclusions and forced turnovers is particularly pronounced for high magnitude exclusions. We also show that greater street exclusion of income-decreasing items, the lower CEO bonus payouts. We find that boards use audited and more conservative GAAP earnings in evaluating and dismissing CEOs, except in the recent period of 2010–2016.

Keywords: Street earnings; Street exclusions; GAAP earnings; CEO turnover (search for similar items in EconPapers)
JEL-codes: G38 J41 K22 M41 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:56:y:2019:i:c:p:249-266

DOI: 10.1016/j.jcorpfin.2019.02.005

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