This paper shows that CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a hand-collected sample of 3,365 CEO turnovers from 1993 to 2009, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry and, to a lesser extent, after bad market performance. A decline in industry performance from the 90 th to the 10 th percentile doubles the probability of a forced CEO turnover. Whether to retain or fire a CEO after bad stock price or accounting performance is one of the most important decisions made by corporate boards. Standard economic theory suggests that, when assessing the quality of its CEO, the board of directors should ignore components of firm performance that are caused by factors beyond the CEO's control. Previous studies of the relation between (arguably exogenous) market or industry performance and CEO turnover find evidence that is largely consistent with this hypothesis. However, using a larger data set that covers a more recent time period and a better methodology, we find that CEOs are significantly more likely to be fired after negative performance shocks to their peer group.Specifically, using a new data set of 2,490 voluntary and 875 forced CEO turnovers in 3,042firms from 1993 to 2009, we document that low industry stock returns and (to a lesser extent) low market returns increase the frequency of forced CEO turnovers. A decrease in the industry component of firm performance from its 90 th to its 10 th percentile doubles the probability of a forced CEO turnover. There is some evidence that boards partially filter industry and especially market performance from their assessments of CEO quality, but the filtering is much too weak to remove all of the peer performance effect. We conclude that boards allow exogenous shocks to firm performance to affect their CEO retention decisions.Standard agency theory shows that there are benefits to evaluating agents on the basis of their relative performance when agents are affected by common shocks (Holmström (1979(Holmström ( , 1982, Diamond and Verrecchia (1982)). In most of the theoretical literature on CEO dismissals, a corporate board learns the quality of its CEO from firm performance and other signals. If the board's assessment of CEO quality falls below some threshold, often the expected quality of a replacement, then the board dismisses the CEO. 1 Since CEO and CEO-firm match quality are not functions of the business cycle in these models, it follows that efficient boards do not force out
This paper shows that CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a hand-collected sample of 3,365 CEO turnovers from 1993 to 2009, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry and, to a lesser extent, after bad market performance. A decline in industry performance from the 90 th to the 10 th percentile doubles the probability of a forced CEO turnover. Whether to retain or fire a CEO after bad stock price or accounting performance is one of the most important decisions made by corporate boards. Standard economic theory suggests that, when assessing the quality of its CEO, the board of directors should ignore components of firm performance that are caused by factors beyond the CEO's control. Previous studies of the relation between (arguably exogenous) market or industry performance and CEO turnover find evidence that is largely consistent with this hypothesis. However, using a larger data set that covers a more recent time period and a better methodology, we find that CEOs are significantly more likely to be fired after negative performance shocks to their peer group.Specifically, using a new data set of 2,490 voluntary and 875 forced CEO turnovers in 3,042firms from 1993 to 2009, we document that low industry stock returns and (to a lesser extent) low market returns increase the frequency of forced CEO turnovers. A decrease in the industry component of firm performance from its 90 th to its 10 th percentile doubles the probability of a forced CEO turnover. There is some evidence that boards partially filter industry and especially market performance from their assessments of CEO quality, but the filtering is much too weak to remove all of the peer performance effect. We conclude that boards allow exogenous shocks to firm performance to affect their CEO retention decisions.Standard agency theory shows that there are benefits to evaluating agents on the basis of their relative performance when agents are affected by common shocks (Holmström (1979(Holmström ( , 1982, Diamond and Verrecchia (1982)). In most of the theoretical literature on CEO dismissals, a corporate board learns the quality of its CEO from firm performance and other signals. If the board's assessment of CEO quality falls below some threshold, often the expected quality of a replacement, then the board dismisses the CEO. 1 Since CEO and CEO-firm match quality are not functions of the business cycle in these models, it follows that efficient boards do not force out
This paper shows that CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a hand-collected sample of 3,365 CEO turnovers from 1993 to 2009, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry and, to a lesser extent, after bad market performance. A decline in industry performance from the 90 th to the 10 th percentile doubles the probability of a forced CEO turnover. Whether to retain or fire a CEO after bad stock price or accounting performance is one of the most important decisions made by corporate boards. Standard economic theory suggests that, when assessing the quality of its CEO, the board of directors should ignore components of firm performance that are caused by factors beyond the CEO's control. Previous studies of the relation between (arguably exogenous) market or industry performance and CEO turnover find evidence that is largely consistent with this hypothesis. However, using a larger data set that covers a more recent time period and a better methodology, we find that CEOs are significantly more likely to be fired after negative performance shocks to their peer group.Specifically, using a new data set of 2,490 voluntary and 875 forced CEO turnovers in 3,042firms from 1993 to 2009, we document that low industry stock returns and (to a lesser extent) low market returns increase the frequency of forced CEO turnovers. A decrease in the industry component of firm performance from its 90 th to its 10 th percentile doubles the probability of a forced CEO turnover. There is some evidence that boards partially filter industry and especially market performance from their assessments of CEO quality, but the filtering is much too weak to remove all of the peer performance effect. We conclude that boards allow exogenous shocks to firm performance to affect their CEO retention decisions.Standard agency theory shows that there are benefits to evaluating agents on the basis of their relative performance when agents are affected by common shocks (Holmström (1979(Holmström ( , 1982, Diamond and Verrecchia (1982)). In most of the theoretical literature on CEO dismissals, a corporate board learns the quality of its CEO from firm performance and other signals. If the board's assessment of CEO quality falls below some threshold, often the expected quality of a replacement, then the board dismisses the CEO. 1 Since CEO and CEO-firm match quality are not functions of the business cycle in these models, it follows that efficient boards do not force out
This article is the result of cooperation between Israeli Jewish and Arab psycholinguists and speech-language disorders specialists. It presents two facets of the Israeli communications disorders scene: (1) a review of some linguistic, psycholinguistic, and sociolinguistic facets of Hebrew and Palestinian Arabic, two Semitic languages whose speakers live, work, and study together in Israel; and (2) against the linguistic background, a review of the state of the speech-language pathology services provided to Arab and Jewish residents of Israel. Some specific challenges to service providers in communication disorders in Israel are discussed in greater detail. These include the multilingual and multicultural nature of the Jewish society in Israel, the effects of diglossia in Arabic on the development of language and literacy, and the difficulties encountered by the Bedouin population of the Negev region in receiving speech-language pathology services. This review is followed by an overview of frameworks and policies of speech-language pathology services regarding these two languages, based on the findings of a comprehensive mapping study. The mapping study examined the needs of the Arab population as compared with the Jewish population in Israel in the field of communication disorders from the perspective of the service providers: the speech-language pathologists (SLPs) in both sectors. The topics covered were as follows: (1) academic studies and professional training; (2) adaptation of assessment and treatment tools both to the Arabic language and culture and to the Hebrew language and Israeli culture; and (3) means for information dissemination about communication disorders. The findings point to notable gaps between the two major sectors in Israeli society. Nonetheless, we hope that the goodwill and deep research commitment of Israeli and Arab scholars in the field of language development and disorders will contribute to the amelioration of this situation and that any development in the field will also be of value to SLPs serving Jewish and Arab clients and their families around the world.
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