 Corporate capital budgeting and CEO turnoverNo 2013-011, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics Abstract: When a firm has minimal agency and informational asymmetry problems it should make efficient capital budgeting decisions. Many firms over-invest prior to CEO turnover, halt investments in the period surrounding the turnover, and then greatly increase their level of expenditures. Empirical analysis of the cross-sectional and inter-temporal variation in the quality of firms' corporate capital budgeting decision reveals that the impact of CEO turnover is asymmetric between under- and over-investing firms, and this complements the larger literature using average firm-wide performance measures. Firms are more likely to have forced turnovers when there is more over-investment prior to the turnover, and these firms make more efficient investment decisions subsequently. Board influence is largely insignificant prior to a CEO turnover but is consistently associated with higher levels of investment subsequently. Keywords: capital budgeting; marginal q; CEO turnover (search for similar items in EconPapers) Published Journal of Corporate Finance, 20(1), 41-58 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wes:weswpa:2013-011 Access Statistics for this paper More papers in Wesleyan Economics Working Papers from Wesleyan University, Department of Economics Contact information at EDIRC. |
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