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The Cadbury Committee, Corporate Performance, and Top Management Turnover
Author(s) -
Dahya Jay,
McConnell John J.,
Travlos Nickolaos G.
Publication year - 2002
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/1540-6261.00428
Subject(s) - accounting , business , presumption , code (set theory) , turnover , management , economics , political science , law , set (abstract data type) , computer science , programming language
ABSTRACT In 1992, the Cadbury Committee issued the Code of Best Practice which recommends that boards of U.K. corporations include at least three outside directors and that the positions of chairman and CEO be held by different individuals. The underlying presumption was that these recommendations would lead to improved board oversight. We empirically analyze the relationship between CEO turnover and corporate performance. CEO turnover increased following issuance of the Code ; the negative relationship between CEO turnover and performance became stronger following the Code's issuance; and the increase in sensitivity of turnover to performance was concentrated among firms that adopted the Code .