Performance-induced CEO turnover

Dirk Jenter and Katharina Lewellen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2021-02-01
New Economics Papers: this item is included in nep-hrm
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Citations: View citations in EconPapers (11)

Published in Review of Financial Studies, 1, February, 2021, 34(2), pp. 569 - 617. ISSN: 0893-9454

Downloads: (external link)
http://eprints.lse.ac.uk/104066/ Open access version. (application/pdf)

Related works:
Journal Article: 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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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:104066

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