The Impact of CEO Turnover on Firm Volatility

Clayton, Matthew J.; Hartzell, Jay C.; Rosenberg, Joshua V.

doi:10.2139/ssrn.222788

Cited by 11 publications

(20 citation statements)

References 6 publications

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“…The variables liquidity and duration are not significantly different in both samples. Consistent with Clayton et al (2005), stock price volatility is considerably greater for the forced relative to voluntary turnover firms.…”

Section: Descriptive Statisticsmentioning

confidence: 59%

“…We utilize five databases in our analysis: Lehman Brothers Fixed Income database (LBFI), Huson et al (2001) database for those CEOs listed in the Forbes Annual Compensation Survey who have held their position for one year or less, Compustat database for financial and firm specific information, Center of Research in Security Prices database (CRSP) for stock pricing data, and Bloomberg financial database for recent bond pricing data that 3 Additionally, Huson et al (2004) find that firm size, measured by the book value of total assets, decreases following forced turnover, while Clayton et al (2005) report similar evidence following outsider replacement. 4 Mansi and Reeb (2002) provide evidence of a positive relation between corporate diversification and bondholder wealth (i.e., increased corporate diversification is associated with a lower cost of debt financing).…”

Section: Datamentioning

confidence: 99%

“…8 Institutional ownership (Inst-own), a proxy for outside monitoring, is computed as the ratio of shares owned by institutions dividend by total common shares outstanding (e.g., Cornett et al, 2007). For firm volatility, we follow Clayton et al (2005) and use their measure of equity volatility. The volatility ratio, in this case, is computed as the natural log of the ratio of post-event to pre-event volatility.…”

Section: Variable Measuresmentioning

confidence: 99%

“…Empirical research has documented that CEO turnover events which are beneficial to stockholders may have indirect negative consequences for bondholders. For example, Clayton et al (2005) suggest that CEO turnover events are associated with increased future equity volatility as a result of uncertainty in future operating performance as well as changes in investing and financing policies. Campbell and Taksler (2003) and Landschoot (2008) find that firm specific volatility can explain variations in bond yields; evidence that equity volatility is an important element in the pricing of corporate bonds.…”

Section: Introductionmentioning

confidence: 99%

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CEO turnover and bondholder wealth

Adams

Mansi

2009

Journal of Banking & Finance

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Section: Descriptive Statisticsmentioning

confidence: 59%

Section: Datamentioning

confidence: 99%

Section: Variable Measuresmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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CEO turnover and bondholder wealth

Adams

Mansi

2009

Journal of Banking & Finance

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“…To control for the effect of outside succession, I use two dummy variables, OUTF t (OUTNF t ) that equals one if the new CEO is an outsider and replaces a dismissed (a voluntarily departing) top executive in year t and zero otherwise. Similar to previous studies, I classify CEO successions as outside if the incoming CEO has been with the firm for a year or less at the time of the succession announcement (Parrino, 1997; Clayton et al, 2000; Khurana and Nohria, 2000; Huson et al, 2001; and Hayes et al, 2002). Detailed information on the career paths of the new CEOs is collected mainly from the Corporate Register and FT articles.…”

Section: Variables and Descriptive Statisticsmentioning

confidence: 99%

Top Director Shake‐up: The Link between Chairman and CEO Dismissal in the UK

Florou

2005

Business Fin & Account

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Most UK companies separate the roles of CEO and Chairman. The former runs the company and the latter runs the board. Using turnover data on 2,180 separate Chairmanships of the top 460 UK firms over the 1990-1998 period, I find that the Chairman is more likely to be replaced when the CEO is dismissed. Detailed data on the dismissal events suggests that Chairman replacement is associated with board restructuring. This may be necessary to bring in different skills and experience which, in turn, might facilitate changes in future corporate decisions. Moreover, I find that the Chairman's previous position, or the type of Chairmanship, does not affect the association between Chairman removal and CEO dismissal. But, the increase in the dismissal likelihood of the Chairman at the time of forced CEO departure is higher when she is involved in the appointment of the failing CEO. This, in turn, can be interpreted as an indication of effective governance. Copyright Blackwell Publishers Ltd, 2005.

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Antecedent and consequence factors of CEO turnover in Indonesia

Lindrianasari

Hartono²

2012

Management Research Review

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This study aimed to test the usefulness of accounting information and market of the CEO turnover issues in Indonesia. The results of this study is planned for the long term to capture the overall factors that affect CEO turnover in Indonesia, not only from the accounting side but also from market side, so it can make a significant contribution for the company strategy to determine the corporate governance' setting. Previous research show inconclusive results about CEO turnover is whether the antecedent factors and consequences. Also, the issue of CEO turnover research is still very rarely done in Indonesia, since the turn of information not generally available. The sample used is all firms that are identified through the turn (either routine or nonroutine) in the company's top management level (in this case is President Director). The main advantage of this study is to use the sample all firms that conduct the CEO turnover period 1998-2005, and subsequently determine the accounting variables that allegedly able to explain these changes. For the companies that during the year observations is never do turnover action we define as a control sample. Final sample that we used for testing accounting data is as much as 140 companies, consisting of 81 companies that make the turnover and the 59 companies that did not. For the final sample testing of market data totaled 131 firms, consisting of 77 companies that make the turnover and the 54 companies that did not. Final sample for the second data source is set after considering the availability of data and the confounding effects during the observation period. Both of accounting data and market data are tested using logit models (separately), because the dependent variable used is a binary variable, 1 for turnover and 0 for others. The results of test show that accounting data (i.e. Total Asset, Total Sales, ROA, ROE and Earnings), statistically have a negative significant effect of turnover decisions while CurRatio and D/ Equity is not significant. The results of test for market data show the performance of stock prices statistically negative significant effect, while market risk have a statistically positive significant effect. This finding is consistent with previous research which states that in the CEO turnover decision making, the company will consider the performance of accounting and market performance achievements of the CEO. From the results of different test using paired samples t-test, we found the stock price rose significantly after the turn while the risk of being seen significant decreases. These findings reveal a positive response to the changing market. And finally, from the analysis of this study we conclude that the better performance of both (accounting and market) then there is a tendency for the incumbent CEO who will not be fired and the worse the performance of both the CEO who is appointed will have the potential to be replaced (down position or enter to the board of commissioners) and fired from the company as ultimatelly.

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The Impact of CEO Turnover on Firm Volatility

Cited by 11 publications

References 6 publications

CEO turnover and bondholder wealth

CEO turnover and bondholder wealth

Top Director Shake‐up: The Link between Chairman and CEO Dismissal in the UK

Antecedent and consequence factors of CEO turnover in Indonesia

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