Performance-Induced CEO Turnover

The “Wall Street Walk” and shareholder activism: Exit as a form of voice

Dirk Jenter and Katharina Lewellen

The Review of Financial Studies, 2021, vol. 34, issue 2, 569-617

Abstract: This paper revisits the relationship between firm performance and CEO turnover. Instead of classifying turnovers into forced and voluntary, we introduce performance-induced turnover, defined as turnover that would not have occurred had performance been “good.” We document a close turnover-performance link and estimate that 38%–55% of turnovers are performance induced. This is significantly more than the number of forced turnovers, though the two types of turnovers are highly correlated. Compared to the predictions of Bayesian learning models, learning about CEO ability appears to be slow, and boards act as if CEO ability (or match quality) was subject to frequent shocks.

JEL-codes: G30 G34 M12 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Performance-induced CEO turnover (2021)
Working Paper: Performance-induced CEO turnover (2017)
Working Paper: Performance-induced CEO turnover (2017)
Working Paper: Performance-Induced CEO Turnover (2014)
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