Download or read book CEO Turnover Performance Sensitivities in Private Firms written by Huasheng Gao and published by . This book was released on 2015 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: We compare CEO turnover in public and large private firms. Public firms have higher turnover rates and exhibit greater turnover-performance sensitivities than private firms. Controlling for pre-turnover performance, performance improvements are greater for private firms than for public firms. We investigate whether these differences are due to differences in quality of accounting information, the CEO candidate pool, CEO power, board structure, ownership structure, investor horizon, or some unobservable differences between public and private firms. One factor contributing to public firms' higher turnover rates and greater turnover-performance sensitivities appears to be investor myopia.
Download or read book A Comparison of Profitability and CEO Turnover Sensitivity in Large Private and Public Firms written by Jeffrey L. Coles and published by . This book was released on 2014 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We construct a large sample of both private and public firms from a broad set of industries to provide a direct comparison of efficiency, profitability, and incentive alignment. We find that operating profit scaled by sales and net profit to sales in private firms are less than half those in public firms. Moreover, we find no evidence that CEO turnover is more sensitive to change in scaled profitability in private firms than in public firms. These results are robust to controls for risk, managerial ownership, industry, whether the CEO is a founder or family member, and firm size. High sensitivity of CEO turnover to performance, one possible way to align managerial and shareholder interests, is not prominently featured in the organization design of private firms, which is consistent with our finding that private firms are less profitable than public firms.
Download or read book CEO Turnover Firm Performance and Corporate Governance in Chinese Listed Firms written by Takao Kato and published by . This book was released on 2005 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using comprehensive financial and accounting data on China's listed firms from 1998 to 2002, augmented by unique data on CEO turnover, ownership structure and board characteristics, we estimate Logit models of CEO turnover and find that: (i) even if the firm is listed in Stock Exchanges, there is no significant and negative link between CEO turnover and firm performance unless the listing is accompanied by an ownership change from state to private; (ii) the presence of a large controlling shareholder makes CEO turnover more sensitive to firm performance; (iii) the appointment of independent directors enhances turnover-performance sensitivities; (iv) CEO turnover-performance sensitivities are weaker for listed firms with CEOs who also hold positions in the controlling shareholders; and (v) firm performance will improve significantly after the replacement of the CEO and the improvement will be greater for privately controlled firms than for state controlled firms. These findings have important implications for China's stock market development and SOE reform as well as more generally the law and finance approach to corporate governance. Consistent with the law and finance approach to corporate governance, the wholesale change of ownership and control from the state to private individuals and firms is found to be the most consistent and significant contributor to stronger CEO turnover-performance link and hence the higher quality of corporate governance. The positive effects of higher independence of board members on turnover-performance link are also consistent with the weak investor protection theory.
Download or read book Strategic Leadership written by Sydney Finkelstein and published by Strategic Management. This book was released on 2009 with total page 480 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book integrates and assesses the vast and rapidly growing literature on strategic leadership, which is the study of top executives and their effects on organizations. The basic premise is that in order to understand why organizations do the things they do, or perform the way they do, we need to deeply comprehend the people at the top-- their experiences, abilities, values, social connections, aspirations, and other human features. The actions--or inactions--of a relatively small number of key people at the apex of an organization can dramatically affect organizational outcomes. The scope of strategic leadership includes individual executives, especially chief executive officers (CEOs), groups of executives (top management teams, or TMTs); and governing bodies (particularly boards of directors). Accordingly, the book addresses an array of topics regarding CEOs (e.g., values, personality, motives, demography, succession, and compensation); TMTs (including composition, processes, and dynamics); and boards of directors (why boards look and behave the way they do, and the consequences of board profiles and behaviors). Strategic Leadership synthesizes what is known about strategic leadership and indicates new research directions. The book is meant primarily for scholars who strive to assess and understand the phenomena of strategic leadership. It offers a considerable foundation on which professionals involved in executive search, compensation, appraisal and staffing, as well as board members who evaluate executive performance and potential, might build their tools and perspectives.
Download or read book CEO Turnover in China written by Martin J. Conyon and published by . This book was released on 2014 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the relation between CEO turnover and firm performance in China's publicly traded firms. We provide evidence on the use of accounting and market-based performance measures in CEO turnover decisions. We also investigate moderating roles of noise in performance measures, firm growth opportunities, State Owned Enterprises, and corporate governance reform on the weights attached to these performance measures. We find that Chinese listed firms rely more on accounting performance than on stock market performance when determining CEO turnover. Firms with noisier performance measures and firms with larger growth opportunities rely less on both accounting and stock market performance in CEO replacement decision. State-controlled firms are more likely to use accounting performance to determine CEO turnover. Finally, we find that the weight attached to the accounting performance measure is significantly reduced and the weight attached to the stock market performance is significantly increased after the governance reform. We also observe that the reform has different impacts on state owned firms and private firms in terms of sensitivity of CEO turnover to firm performance.
Download or read book Disagreement induced CEO Turnover written by Sheng Huang and published by . This book was released on 2019 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We propose and test a new explanation for forced CEO turnover, and examine its implications for the impact of firm performance on CEO turnover. Investors may disagree with management on optimal decisions due to heterogeneous prior beliefs. Theory suggests that such disagreement may be persistent and costly to firms; we document that this induces them to sometimes replace CEOs who investors disagree with, controlling for firm performance. A lower level of CEO-investor disagreement serves to partially “protect” CEOs from being fired, thus reducing turnover-performance sensitivity, which we also document. We also show that firms are more likely to hire an external CEO as a successor if disagreement with the departing CEO is higher. Disagreement declines following forced CEO turnover. Using various empirical strategies, we rule out other confounding interpretations of our findings. We conclude that disagreement, independently of firm performance, affects forced CEO turnover.
Download or read book CEO Turnover written by Kathleen Anne Farrell and published by . This book was released on 1994 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Political Capital Vs Constraint written by Jerry Cao and published by . This book was released on 2017 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Previous theoretical and empirical studies suggest that CEOs' political connections are valuable to firms. We examine whether such connections become constraints if the expected political capital fails to materialize and the firm lacks other type of political power in place. Using a sample of listed firms in China, we show that politically connected CEOs in privately controlled (i.e., not state-owned) firms have longer tenure, lower turnover, and weaker turnover-performance sensitivity than non-politically connected CEOs. Further identification tests show that these turnover patterns are not consistent with alternative explanations for turnover patterns such as superior managerial ability or reduction in managerial myopia. The turnover patterns are less pronounced in firms that have alternative political power, such as connected boards or state ownership. Following the turnover of politically connected CEOs, performance improves only for the state-owned firms. Our results call for new theories that comprehend both values and costs of political connection.
Download or read book Executive Compensation and Shareholder Value written by Jennifer Carpenter and published by Springer Science & Business Media. This book was released on 2013-04-17 with total page 159 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive compensation has gained widespread public attention in recent years, with the pay of top U.S. executives reaching unprecedented levels compared either with past levels, with the remuneration of top executives in other countries, or with the wages and salaries of typical employees. The extraordinary levels of executive compensation have been achieved at a time when U.S. public companies have realized substantial gains in stock market value. Many have cited this as evidence that U.S. executive compensation works well, rewarding managers who make difficult decisions that lead to higher shareholder values, while others have argued that the overly generous salaries and benefits bear little relation to company performance. Recent conceptual and empirical research permits for the first time a truly rigorous debate on these and related issues, which is the subject of this volume.
Download or read book The Handbook of the Economics of Corporate Governance written by Benjamin Hermalin and published by Elsevier. This book was released on 2017-09-18 with total page 762 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward
Download or read book CEO Turnover in LBOs written by Francesca Cornelli and published by . This book was released on 2015 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the CEO turnover in LBOs backed by private equity funds. When a company is taken private, we find that the CEO turnover decreases and is less contingent on performance. We also find that a higher involvement of the LBO sponsors, who replace the outside directors on the board after transition to private, reduces the CEO turnover and its sensitivity to performance, but improves the operating performance. These findings suggest that more inside information and effective monitoring allow private equity funds to assess CEOs' performance over a longer horizon relative to their publicly-traded counterparts.
Download or read book Determinants of CEO Turnover in Public and Private Firms in Denmark written by Carina Sponholtz and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on Executive Turnover written by Johan Maharjan and published by . This book was released on 2015 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1 deviates from the conventional practice by highlighting an alternative to forced CEO turnover. An interesting puzzle in corporate finance is the week sensitivity of disciplinary action against CEO to poor firm performance. I show that this weak relation is in part driven by an overlooked alternative to firing, which in practice takes the form of splitting the CEO-Chairman role or demoting the incumbent CEO to the executive Chairman position. I first document that such demotions are a frequently used alternative disciplinary mechanism, accounting for nearly 40% of all involuntary CEO transitions. I further show that the use of this mechanism is concentrated among firms in which the CEO is most entrenched or the cost of firing its CEO is high, i.e. CEOs with firm or industry-specific managerial skills and those with strong long-term performance and weak governance. Market reactions to CEO demotions are positive, on average. Finally, I show that classifying CEO demotions as an alternative form of involuntary turnover magnifies the sensitivity of involuntary turnover to firm performance and eliminates the relation between performance and voluntary turnover. In chapter 2, we examine the role of deferred vesting of stock and option grants in reducing executive turnover. To the extent an executive forfeits all unvested stock and option grants if she leaves the firm, deferred vesting will increase the cost (to the executive) of early exit. Using pay Duration proposed in Gopalan, et al., (forthcoming) as a measure of the length of managerial pay, we find that CEOs and non-CEO executives with longer pay Duration are less likely to leave the firm voluntarily. Employing the vesting of a large prior-year stock/option grant as an instrument for Duration, we find the effect to be causal. CEOs with longer pay Duration are also less likely to experience a forced turnover and the sensitivity of forced CEO turnover to firm performance is significantly lower in firms that offer longer duration pay. Overall, our study highlights a strong link between compensation design and turnover for top executives. Finally, in chapter 3, we develop and test a new explanation for forced CEO turnover. Investors may disagree with management on the optimal course of corporate actions due to heterogeneous prior beliefs. Such disagreement may be persistent and costly to firms, and thus create incentives for firms to replace CEOs who investors tend to disagree with. We use this logic to develop and provide evidence for three hypotheses. First, firms with higher investor-management disagreement are more likely to fire their CEOs, and this effect is more pronounced in more-financially-constrained firms as well as those with less-entrenched CEOs and stronger shareholder governance. Second, firms are more likely to hire an external CEO as a successor if investor-management disagreement with the departing CEO is higher. Third, investor-management disagreement declines following forced CEO turnover. Thus, the evidence sheds new light on how disagreement between management and investors shapes one important aspect of corporate governance--the replacement of CEOs.
Download or read book Internal Monitoring Mechanisms and CEO Turnover written by Mark R. Huson and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We report evidence on chief executive officer (CEO) turnover during the 1971 to 1994 period. We find that the nature of CEO turnover activity has changed over time. The frequencies of forced CEO turnover and outside succession both increased. However, the relation between the likelihood of forced CEO turnover and firm performance did not change significantly from the beginning to the end of the period we examine, despite substantial changes in internal governance mechanisms. The evidence also indicates that changes in the intensity of the takeover market are not associated with changes in the sensitivity of CEO turnover to firm performance.
Download or read book National Culture Cross Listing CEO Turnover and Sensitivity to Performance written by Saeed Ghasseminejad and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine how cross-sectional differences in national culture dimensions affect the probability of CEO turnover and its sensitivity to firm performance after cross-listing by a non-U.S. firm in the United States. I find that three of the Hofstede indexes (long-term orientation, power distance, and uncertainty avoidance) are correlated with a lower probability of CEO turnover. I find for two of the three indexes that when a firm from a country with higher (lower) index than the United States cross-list in the United States, the firm becomes more (less) sensitive to negative performance in comparison with non-cross-listed firms from the same country. This outcome is associated with an increased (decreased) probability of CEO turnover. The two-way effect of the national culture of the host country (the United States) on cross-listed firms suggests that cultural exchange affects corporate culture and consequently influences relevant financial decisions.
Download or read book How Has CEO Turnover Changed written by Steven N. Kaplan and published by . This book was released on 2006 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study CEO turnover - both internal (board driven) and external (through takeover and bankruptcy) - from 1992 to 2005 for a sample of large U.S. companies. Annual CEO turnover is higher than that estimated in previous studies over earlier periods. Turnover is 14.9% from 1992 to 2005, implying an average tenure as CEO of less than seven years. In the more recent period since 1998, total CEO turnover increases to 16.5%, implying an average tenure of just over six years. Internal turnover is significantly related to three components of firm performance - performance relative to industry, industry performance relative to the overall market, and the performance of the overall stock market. Also in the more recent period since 1998, the relation of internal turnover to performance is more strongly related to all three measures of performance in the contemporaneous year. External turnover is not significantly related to any of the measures of stock performance over the entire sample period, nor over the two sub-periods. We discuss the implications of these findings for various issues in corporate governance.
Download or read book Corporate Performance Corporate Governance and Top Executive Turnover in Finland written by Benjamin Maury and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically investigates how corporate governance forces and firm performance affect top executive turnover in Finnish listed companies. I document an increase in CEO, top management, and board turnover in response to poor stock price performance and operating income losses. The sensitivity of the relation between stock price performance and CEO turnover is significantly higher in firms with a two-tier board structure (when the CEO is not the Chairman), but significantly lower when the CEO or a board member is the controlling shareholder. These results suggest that both the ownership structure and the board design have implications for the disciplining of managers.
