Corporate capital budgeting and CEO turnover

Corporate litigation and executive turnover

“…12 Secondly, board vigilance, as proxied by the proportion of independent directors (%OUTSIDE t-1 ), is positively and significantly associated with the likelihood of CEO turnover during the (0,+3) period at the 10% and 1% levels, respectively, in Models (1) and (3). This confirms the view that boards dominated by independent directors are more effective in removing CEOs (Hornstein, 2013;Jensen, 1993;Weisbach, 1988). However, the statistical significance of the variable does not persist in predicting CEO turnover during the (−1,+3) period in Models (2) and (4).…”

“…firm performance (including changes in firm size, ROA, stock performance, and ROE), free cash-flow, board independence, and the size and independence of the compensation committee, as well as CEO characteristics, including age, gender, internal appointment, stock ownership, change in stock ownership, and tenure (Bugeja et al, 2012;Hornstein, 2013). Period fixed effects are employed in the panel regressions to account for temporal factors affecting the percentage change in CEO compensation.…”

Chief Executive Officer Succession and Financial Constraints: Evidence from China

“…However, when a CEO turnover occurs, investment policy, operating activities, and financing status appear to be the first to be affected. Although there are several studies focusing on the influence of CEO succession on investment decisions (Harrison and Fiet, ; Hornstein, ) and operating activities (Huson et al ., ), there is little evidence regarding the influence of CEO succession on firm financing activities.…”

“…As performance usually deteriorates before a forced turnover, shareholders and boards expect new CEOs to make more changes and improvements (Nakauchi and Wiersema, ). Hornstein () provides evidence that the agency problem is lower, and management skill is significantly improved following a forced turnover. Furthermore, compared with forced‐departure CEOs, new CEOs may have more harmonious relationships with their boards (Hornstein, ), which would confer on new CEOs greater more discretionary powers.…”

“…Much research has found that the performance and strategy of a firm change significantly before and after the CEO turnover (see review by Kesner and Sebora, ; Giambatista et al ., ; Chang and Wong, ; Chung and Luo, ). From a holistic perspective, these studies are very useful in examining the overall performance quality of a firm under a new CEO (Hornstein, ). However, when a CEO turnover occurs, investment policy, operating activities, and financing status appear to be the first to be affected.…”