Are Investors More Reactive to Simultaneous Changes in Chief Executive Officer and Chair Positions?

Myriam García-Olalla (), Eleuterio Vallelado () and Jonathan Williams ()
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Myriam García-Olalla: Universidad de Cantabria
Eleuterio Vallelado: Universidad de Valladolid
Jonathan Williams: Surrey Business School, University of Surrey

Chapter 5 in Trends, Issues, and Challenges in Banking and Finance, 2025, pp 101-126 from Palgrave Macmillan

Abstract: Abstract We estimate cumulative average abnormal returns for 2644 announcements of turnover in the chief executive officer (CEO) and Chair positions at 915 nonfinancial European companies between 2002 and 2021. Specifically, we determine investors’ reaction to news of simultaneous turnover in the two positions. Our results show, on average, that investors perceive turnover as a vehicle to enhance firm performance. Markets react negatively to the simultaneous exit of CEO and Chair and positively albeit insignificantly to simultaneous entry. There is mixed, insignificant reaction to cases of CEO exit and a new Chair. Markets respond unfavorably to simultaneous turnover in the CEO position but react positively to news of an incoming CEO and negatively to news of a CEO firing or exit. Our evidence shows that markets respond vigorously to news of changes in CEO than to changes in the Chair which are smaller and mostly insignificant.

Keywords: CEO; Board Chair; turnover; event study (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-031-96066-6_5

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DOI: 10.1007/978-3-031-96066-6_5

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