CEO turnover and stock price crash

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CEO turnover and stock price crash

 

Author: Wu, Chun Wah Michael
Title: CEO turnover and stock price crash
Degree: D.B.A.
Year: 2013
Subject: Stocks -- Prices
Chief executive officers -- Dismissal of
Hong Kong Polytechnic University -- Dissertations
Department: Faculty of Business
Pages: ix, 144 leaves ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2825648
URI: http://theses.lib.polyu.edu.hk/handle/200/7978
Abstract: This study investigates whether there is an association between CEO turnover and stock price crash. Using a large sample of U.S. firms from the period 1994 to 2011, I find strong evidence of a positive and significant relation between stock price crash and CEO turnover in the subsequent fiscal year using different crash risk measures and controlling for firm performance measures. The relation is more pronounced for CEO turnover that is not retirement related. In contrast, stock price crash is insignificantly associated with CEO turnover that is retirement related. This evidence provides support for the conjecture that boards are willing to fire CEOs who perform poorly (proxied by stock price crash). Finally, the association between stock price crash and CEO turnover is significant before and after the passage of the Sarbanes Oxley Act (SOX) suggesting that SOX did not affect corporate boards{174} incentives to fire poor performing CEOs. Similarly there are no differences in results for large and small firms. The results of this study add to the literature on links between firm performance and CEO turnover.

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