The Impacts Of CEO Turnover & Degree Of Internationalization On The Accuracy Of Analyst Forecasts

Abstract

Keywords: CEO, Chief Executive Officer, turnover, turnover event, analyst forecasts, earning forecasts, forecast accuracy, internationalization, degree of internationalization, firm complexity, voluntary turnover, forced turnover, transparency, duality, successor, regulation fair disclosure, Sarbanes-Oxley Introductionhe impact of CEO turnover is a popular topic and has been thoroughly discussed in the literature. Studies have analyzed several perspectives regarding the impact of CEO turnover. In general, there are many reasons why CEOs might depart from their position. Given the circumstance surrounding the event, a certain level of information may be disclosed about the company. Voluntary turnovers usually follow the natural course and limited information typically becomes available. However, when a CEO is forced out of the company, the literature has found that this is often related to negative company performance or other important reasons that the company must divulge to the public while simultaneously terminating the CEO. This information can be used by analysts to provide better post-turnover forecasts when compared with the pre-turnover forecasts. This additional transparency is typically only useful for a limited amount of time while the new CEO becomes acquainted with the firm. After some time, the impacts of the new CEO begin to take affect, and the different management styles begin to diverge, leading to either consistent or different levels of accuracy, depending on the new management team and their relationship with Wall Street. However, as the level of firm complexity increases, the post-turnover information is expected to have a lower impact on forecasts.This study investigates the impacts of CEO turnover and internationalization on the accuracy of analyst forecasts. There has been limited research in this area, particularly as it relates to the firm"s degree of internationalization, herein related to firm complexity. Sheikholeslami, Wilson, and Selin (1998) provided some initial insights and empirical findings to the relationship between CEO turnover and forecast accuracy, but did not incorporate other factors, such as the impact from the firm"s degree of internationalization. There exists a vast amount of research linking forecast accuracy and internationalization (e.g., Chansog & Pantzalis, 2003;Erwin & Perry, 2000;Clement, 1999;Dunn & Nathan, 2005;Erwin & Perry, 2000;Jacob, Lys, & Neale, 1999). Hence, this study extends the literature by assessing the relationship between CEO turnover and forecast accuracy for different levels of internationalization.T

Benchmarking Of Johannesburg Stock Exchange CEO Compensation

“…The interest in this topic is that excessive CEO compensation is seen as pay hikes by many stakeholders. Since stock markets are sensitive to CEO information (Bernard, 2008;Setiawan, 2008), the CEO's remuneration should send the appropriate signal to stakeholders (Theunissen, 2010). Companies signal that their CEO is above average and therefore these excessive compensations are in a continuously increasing upwards spiral due to most company boards wanting their CEO to be in the top half of the CEO's peer group (Hayes & Schaefer, 2007).…”