CEO Diversity, Political Influences, and CEO Turnover in Unstable Environments: The Romanian Case

Abstract

This work expands the literature on a less studied topic, the Chief Executive Officer (CEO) turnover in post-communist economies, analyzed during an unstable and ambiguous economic and financial environment. For the period 2005–2010, the results indicate the political inference in CEO turnover decision for the Romanian listed companies. In this period, with great turmoil in the economy determined by the financial crisis of 2008, we also find that CEO gender helps to explain the probability of changing the CEO. Moreover, this paper empirically tests if the financial and corporate governance determinants that are validated in the existing literature work for the Romanian listed companies. We reinforce that CEO turnover decision is negatively related to accounting-based performance. We find evidence of the “voting with their feet” behavior of institutional investors, and of the lack of Board of Directors monitoring. The CEO–Chairman duality and the controlling power of the largest shareholder act as entrenchment mechanisms.

CEO Duality: Newspapers and Stock Market Reactions

“…The importance of a CEO's role in the company and for financial markets has led scholars to intensify research on the topic over years (Dragotă et al 2020;Huu Nguyen et al 2020). Among the different CEO characteristics, one of the most ambiguous aspects in corporate governance is CEO duality: the practice of a single subject serving the board both as CEO and as Chairman (Bhagat and Bolton 2008;Peng et al 2007).…”

The effect of investor protection on forced CEO turnover

“…Other studies have examined companies in multiple states but did not distinguish between voluntary and forced CEO changes (Defond and Hung, 2004;Lel and Miller, 2008;Hu and Kim, 2019). However, other research has only studied forced CEO changes but limited the analysis to companies in a single country (Kang and Shivdasani, 1995;Pi and Lowe, 2011;Durukan et al, 2012;Dardour et al, 2018;Ghosh and Wang, 2019;Dragot a et al, 2020).…”

“…Regarding CEO data, we identified CEO turnover in a given year compared to the previous year and classified each turnover as forced or voluntary, similar to previous studies (Kang and Shivdasani, 1995;Pi and Lowe, 2011;Durukan et al, 2012;Dardour et al, 2018;Dragot a et al, 2020). We analyzed the information provided by companies, press reports, news media and other available data on the internet.…”

Pengaruh Pergantian CEO dan Pengungkapan CSR sebagai Maslahat Mursalah terhadap Manajemen Laba dengan Struktur Corporate Governance sebagai Variabel Moderasi

“…Pergantian CEO merupakan fenomena yang sering terjadi dan dianggap sebagai strategi terbaik bagi perusahaan yang sedang mengalami penurunan demi menentukan nasib barunya di masa depan. Namun, perusahaan juga dikatakan tidak stabil apabila terlalu sering mengalami pergantian CEO setiap tahunnya (Dragotă et al, 2020). Penelitian yang dilakukan oleh Price Waterhouse Cooper (PWC) pada tahun 2015 menemukan fakta bahwa sepanjang tahun 2015 sebanyak 17% dari 2.500 perusahaan publik terbesar di dunia mengganti CEO mereka.…”