The effect of CEO departure on target firms’ post-takeover performance: Evidence from not-delisting target firms

Gul Demirtas and Serif Aziz Simsir

Finance Research Letters, 2016, vol. 16, issue C, 55-65

Abstract: Using a sample of target firms that do not delist from the stock market after a majority takeover, we investigate the effect of the target CEO's departure on their firms’ subsequent financial performance. We find that CEO departures have a positive effect on the target firms’ long-run operating performance, measured by firms’ operating return on assets and return on equity. However, we do not find a significant effect of CEO turnover on target stock returns in the post-takeover period. These results are consistent with the predictions of the inefficient management hypothesis, which contrast with those of the valuable management hypothesis.

Keywords: Corporate takeover; Acquisition performance; CEO turnover (search for similar items in EconPapers)
JEL-codes: G14 G30 G34 M12 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:16:y:2016:i:c:p:55-65

DOI: 10.1016/j.frl.2015.10.012

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