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Are CEOs Replaced For Poor Performance? Effects of Takeovers and Governance on CEO Turnover
Author(s) -
HomRoy Swarnodeep
Publication year - 2015
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12068
Subject(s) - corporate governance , business , turnover , agency cost , agency (philosophy) , principal–agent problem , economics , accounting , monetary economics , labour economics , finance , shareholder , management , philosophy , epistemology
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.