Are CEOs replaced for poor performance?: effects of takeovers and governance on CEO turnover

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Abstract

This article analyzes the risk of CEO turnover in US firms over the period 1993–2011. There is an increase in the CEO turnover rate and a 41% decline in median tenure. Where firm performance is poor, CEOs are increasingly replaced, either by the board or in the process of the firm being taken over. US corporate governance regulations had some success in mitigating the agency problem. In the wake of those reforms, CEO turnover outcomes are more strongly associated with firm performance. The declining CEO tenure may have structural impacts on CEO pay.
Original languageEnglish
Pages (from-to)149-170
Number of pages22
JournalScottish Journal of Political Economy
Volume62
Issue number2
DOIs
Publication statusPublished - 2015
Externally publishedYes

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