Download or read book Effects of CEO Turnover in Banks written by Krishnamurthy Subramanian and published by . This book was released on 2017 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effects of CEO turnover in banks. Incoming bank CEOs face problems from information asymmetry because banks' operations are opaque and bank risk can change dramatically in a short time. Incoming bank CEOs may therefore change bank policies to manage their personal risks. Since CEO turnover is usually endogenous, we utilize a setting where CEO turnover is based solely on retirement age and is thus exogenous to bank performance. Consistent with our thesis, incoming CEOs increase provisioning for future delinquencies and shrink lending. Bank stock prices decline following these changes. Politically motivated lending or ever-greening cannot explain our results.

Download or read book Bank CEOs written by Claudia Curi and published by Springer. This book was released on 2018-05-22 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book thoroughly explores the characteristics and importance of bank CEOs against the backdrop of growing awareness of the social implications of CEO behavior for the performance and stability of the financial and economic system. After an introductory section on the relevance of CEOs in the banking industry, the connections between the bank CEO labor market, contractual incentives, and compensation structures are examined. The focus then turns to empirical findings concerning the impact that bank CEO compensation has on various firm-level outcomes, such as bank performance and strategies. In addition, the relation between CEO turnover and changes in compensation policies since the financial crisis is discussed. A concluding section presents some fresh empirical evidence deriving from an up-to-date database of traits of CEOs operating in the largest European banks. For PhD students and academics, the surveys offer detailed roadmaps on the empirical research landscape and provide suggestions for future work. The writing style ensures that the content will be readily accessible to all industry practitioners.

Download or read book CEO Turnover and Earnings Management in Banks written by Arkodipta Sarkar and published by . This book was released on 2017 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effect of CEO turnover on earnings management in banks. Since banking is intrinsically an opaque activity, we hypothesize that an incoming CEO of a bank is more likely to manage earnings than a counterpart in a non financial firm. To identify the hypothesized effects, we exploit exogenous variation generated by age-based CEO retirement policies in Indian public sector firms. Compared to banks where there is no turnover, banks experiencing CEO turnover report 23% lower profit-to-sales and 25% lower return-on-assets in the transition quarter. This decrease occurs due to increased provisions, though such provisions do not associate with increased non-performing assets subsequently. Shorter CEO tenure exacerbates earnings management by the incoming CEO. The stock price declines by 1%, and lending is 2% lower than average, which highlight the real effects of earnings management by incoming CEOs. In contrast to banks, we observe no earnings management coinciding with CEO turnover for other public sector firms. As evidence of motivation, we show that earnings management increases likelihood of directorship positions in other firms within two years of retirement.

Download or read book Turnover Threat and CEO Risk Taking Behavior in the Banking Industry written by Zhongdong Chen and published by . This book was released on 2019 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study we investigate the risk-taking reaction of bank CEOs to turnover threats they anticipate. In contrast with the previous studies (e.g., Chakraborty, Sheikh and Subramanian, 2007), we find a concave relationship between the turnover threat and CEO risk taking in banking industry such that the highest levels of risk taking take place when CEO is faced with medium to high levels of turnover threats. When the turnover threat is imminent, bank CEOs take relatively less risk. We also investigate the impact of independent directors on this relationship and find that the effects of CEO turnover threat on CEO risk-taking behavior concentrates on banks with a more independent board.

Download or read book Deregulation and Board Policies written by Rachel M. Hayes and published by . This book was released on 2019 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial crisis has led to renewed interest in the effects of deregulation on bank governance and incentives provided to bank CEOs. We examine the relation between bank CEO turnover and performance, and whether this relation has been affected by banking deregulation. We find that bank CEO turnover is more (less) sensitive to stock (accounting) performance in the post-deregulation period. We also find that such changes in turnover-performance sensitivity primarily exist in large banks, which are best positioned to exploit growth opportunities, and in banks that expand geographically after deregulation. Our results indicate an increased (decreased) emphasis on stock (accounting) performance in turnover decisions when competition and growth opportunities are greater in the deregulated environment. The findings provide evidence that the information used in board decisions varies with features of the competitive environment.

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 The Impact of CEO Turnover on Equity Volatility written by and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: "A change in executive leadership is a significant event in the life of a firm. This study investigates an important consequence of a CEO turnover: a change in equity volatility. We develop three hypotheses about how changes in CEO might affect stock price volatility, and test these hypotheses using a sample of 872 CEO turnovers over the 1979-95 period. We find that volatility increases following a CEO turnover, even when the CEO leaves voluntarily and is replaced by someone from inside the firm. Forced turnovers increase volatility more than voluntary turnovers--a finding consistent with the view that forced departures imply a higher probability of large strategy changes. For voluntary departures, outside successions increase volatility more than inside successions. We attribute this volatility change to increased uncertainty over the successor CEO's skill in managing the firm's operations. We also document a greater stock price response to earnings announcements following CEO turnover, consistent with more informative signals of value driving the increased volatility. Our findings are robust to controls for firm-specific characteristics such as firm size, changes in firm operations, and changes in volatility and performance prior to the turnover"--Federal Reserve Bank of New York web site.

Download or read book Executive Pay and Performance written by R. Glenn Hubbard and published by . This book was released on 1994 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines an effect of deregulating the market for corporate control on CEO compensation in the banking industry. Given that each state's banking regulation defines the competitiveness of its corporate control market, we examine the effect of a state's interstate banking regulation on the level and structure of bank CEO compensation. Using panel data on 147 banks over the decade of the 1980s, we find evidence supporting the hypothesis that competitive corporate control markets (i.e., where interstate banking is permitted) require talented managers whose levels of compensation are higher. We also find that the compensation-performance relationship is stronger than for managers in markets where interstate banking is not permitted. Further, CEO turnover increases substantially after deregulation, as does the proportion in performance-related compensation. These results suggest strong evidence of a managerial talent market -- that is, one which matches the level and structure of compensation with the competitiveness of the banking environment.

Download or read book CEO Turnover Forced Chairman Replacements and Firm Performance written by Esteban Lafuente and published by . This book was released on 2008 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the effectiveness of corporate governance mechanisms in the Costa Rican banking sector, an industry characterised by fully outside boards. Using a rich data set from the Costa Rican Central Bank for the period 1999-2004, we carry out a regression analysis using the GMM technique in order to address endogeneity and firm-specific effects. The main contribution of the paper indicates that corporate governance matters for improving performance. Empirical findings indicate that investors view forced Chairman departure followed by an outsider and the appointment of an outside CEO as positive events, since these events create the conditions for organisational change leading to significant improvements in firm performance. In addition, results suggest that forced replacement of board members is an abrupt process that creates costs that outweigh its benefits.

Download or read book Does Industry specific Expertise Improve Board Functioning written by Zhongdong Chen and published by . This book was released on 2013 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates whether independent directors' expertise in the industry in which the firm operates improves board functioning. To assess the quality of board functioning, I examine firm performance following a CEO turnover. Using a sample of 173 bank CEO turnovers from 1995 to 2010, I find that the market responds more favorably to forced CEO turnover decisions when they are made by a board with more independent financial industry experts. I document that following a forced bank CEO turnover, improvements in bank performance are positively related to independent financial industry expertise on the board, while bank-risk taking is negatively correlated with such expertise. This is likely because a properly functioning board is particularly important when a forced CEO turnover becomes necessary, and industry-specific expertise greatly improves boards' ability to locate a superior successor CEO and to monitor and advise new management in such a crisis situation. I do not find that board independence has a similar impact on bank performance or risk-taking.

Download or read book All s Fair in Love War Bankruptcy Corporate Governance Implications of CEO Turnover in Financial Distress written by Ethan Bernstein and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior discussions of management turnover during financial distress have examined bankrupt and non-bankrupt firms as distinct groupings with little overlap. Separately investigating rates of turnover in-bankruptcy and out-of-bankruptcy, without a direct comparison between the two, has resulted in a narrowing of the accepted influence of bankruptcy law to post-petition, in-court decisions. Based on new evidence of CEO turnover in 2001, I argue empirically that this distinction between in-court and out-of-court restructuring has become meaningless from a governance perspective. In 2001, filing for bankruptcy did not change the rate of CEO turnover when one controls for financial condition. This statistically significant finding indicates that the shadow of bankruptcy has lengthened, making bankruptcy law a central tenet of governance policy regardless of whether a Chapter 11 petition is ever filed. After presenting these results, this article considers the implications of these results on the changing perceptions of the role of CEOs and the evolution of the multi-pronged U.S. corporate governance system.

Download or read book Bank Certification Effect on CEO Compensation written by Amine Khayati and published by . This book was released on 2010 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contrary to other forms of outside financing, the announcement of a bank loan agreement prompts a positive and significant market return. Throughout the literature, bank loans are deemed special and unique due to multiple benefits accruing to bank borrowers. The short-term positive market reaction is however inconsistent with the long-term underperformance of borrowing firms (Billet et al., 2006). We find that unlike shareholders, CEOs gain from the bank loan relation over the long-term. Specifically, we find that bank loan agreement elicits a significant increase in total compensation through an increase in non-performance based compensation components such as salary, bonus and other compensation. We also notice a smaller proportion of pay-at-risk. Additional results indicate that bank loan agreement significantly reduces the probability of CEO turnover in the subsequent year, and no change in the probability of CEO turnover in the three years following the loan. Generally, the results suggest that subsequent to a major bank loan, CEOs seem to gain enough influence to shield their compensation from the firm's underperformance and to secure employment. In particular, this evidence supports the "uniqueness" of bank loan relations.

Download or read book Banks as Corporate Monitors written by Qing He and published by . This book was released on 2017 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: ​This paper examines the governance role of banks in replacement of underperforming CEOs in firms listed on Chinese stock exchanges. Under most circumstances, the findings suggest that the presence of outstanding loans does not increase the probability that a poorly performing CEO will be forced out and replaced. However, there is a positive and significant effect if the under-performing firm relies heavily on secured and short-term bank lending. Bank loans increase the likelihood of a forced CEO turnover in private firms, especially where joint-equity banks serve as the main lenders to the firm. There is no similar increase in the probability of a CEO turnover for state-owned firms or firms that borrow mainly from state-owned banks. Thus, where state ownership of banks and listed firms implies inefficiency or reluctance on monitoring borrower performance, there is an opportunity to improve loan contract arrangements to improve the monitoring role of lending banks.

Download or read book Who Disciplines Bank Managers written by Andrea M. Maechler and published by International Monetary Fund. This book was released on 2009-12-01 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We bring to bear a hand-collected dataset of executive turnovers in U.S. banks to test the efficacy of market discipline in a 'laboratory setting' by analyzing banks that are less likely to be subject to government support. Specifically, we focus on a new face of market discipline: stakeholders' ability to fire an executive. Using conditional logit regressions to examine the roles of debtholders, shareholders, and regulators in removing executives, we present novel evidence that executives are more likely to be dismissed if their bank is risky, incurs losses, cuts dividends, has a high charter value, and holds high levels of subordinated debt. We only find limited evidence that forced turnovers improve bank performance.

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 The Real Effects of CEO Compensation written by Jing Luo and published by Open Dissertation Press. This book was released on 2017-01-27 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "The Real Effects of CEO Compensation: Evidence From Equity and Bonus Incentive Plans" by Jing, Luo, 羅婧, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This thesis consists of two essays exploring the effects of executive compensation contracts on the real economy. Evidence from equity incentive schemes and annual bonus plans are provided separately in the two essays. The first essay examines the relation between CEO option compensation and bank risk-taking, and the role of CEO option compensation in affecting bank performance during the 2007-2008 financial crisis. Through panel regressions, I find that over the sample period (1993-2011), option awards received by bank CEO and CEO option holdings lead to higher bank risk which is not rewarded by better performance. Bank CEOs take more risk by engaging more in financial innovation and maintaining more risky loan portfolios. Institutional investors favor high option compensation in their own interests of pursuing short-term stock price upswing, while a larger board corrects this excessive risk-taking by providing bank CEOs with less option compensation. Cross-sectional evidence shows that during the crisis period, the effect of option compensation in increasing risk-taking and worsening performance comes from exercisable option holdings. In addition to the findings regarding option compensation, stock awards are shown to affect bank risk and performance, while stock holdings play no role. In the second essay, using a hand collected sample of 1491 firm-years spanning 2006-2011, for which I have been able to gather from annual incentive schemes performance measures and two levels of corresponding targets which represent board directors' performance expectations on chief executive officers (CEOs), I discover that the probability of CEO turnover significantly increases when a firm fails to meet its performance targets, and the likelihood of CEO replacement becomes even higher when minimum performance targets are missed. In a horse race of various financial measures used, failure to meet earnings targets most significantly increases the likelihood of CEO dismissal, and cash flow matters most when minimum targets are considered. Further, the effect varies with firm characteristics in that failing to meet revenue targets lead to turnover only in growth firms, while only in distressed firms CEOs are more likely to lose the job because of missing cash flow targets. Results are robust to the control of possible selection issues related to performance target disclosure and the choice of financial measures. Subjects: Executives - Salaries, etc

Download or read book Why CEOs Fail written by David L. Dotlich and published by John Wiley & Sons. This book was released on 2007-12-10 with total page 206 pages. Available in PDF, EPUB and Kindle. Book excerpt: Führungskräfte in Unternehmen wollen erfolgreich sein. Doch nicht selten sabotieren sie ihren Erfolg, weil sie zu bestimmten negativen Verhaltensweisen neigen - den sog. 11 Todsünden. Obwohl dieselben Verhaltensweisen sie in gewissem Maße in diese Führungsposition gebracht haben mögen, können sie ab einem bestimmten Zeitpunkt negativ, ja zerstörerisch werden. "Why CEOs Fail" ist ein praktischer Leitfaden, wie man diese 11 Todsünden vermeidet. Die Autoren - beide Psychologen und erfahrene Coaches mit internationaler Klientel - erläutern hier in kurzen, übersichtlichen Kapiteln die 11 Todsünden am Beispiel von zahlreichen pikanten Geschichten und lehrreichen Anekdoten aus ihrer täglichen Beratungspraxis. Überzeugend, direkt und präzise auf den Punkt gebracht! Mit einem Vorwort von Ram Charan, dem Mitautor des Mega-Bestsellers "Execution". "Why CEOs Fail" - Eine fesselnde und inspirierende Lektüre, wie man die typischen Verhaltensfehler meidet und als Führungskraft erfolgreich ist.