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Robust Models of CEO Turnover: New Evidence on Relative Performance Evaluation

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  • C Edward Fee
  • Charles J Hadlock
  • Jing Huang
  • Joshua R Pierce

Abstract

We examine the robustness of empirical models and findings concerning CEO turnover. We show that the sensitivity of turnover to abnormal firm performance is an extremely robust result. In contrast, evidence indicating a relation between turnover and industry performance is both weak and fragile. We show that small changes in turnover modeling choices can affect inferences in a large way. Our evidence casts substantial doubt on the hypothesis that there is a large industry performance component to turnover decisions. We use our findings to offer some general prescriptions for checking robustness results in CEO turnover research.Received June 6, 2017; editorial decision July 10, 2017 by Editor Uday Rajan.

Suggested Citation

  • C Edward Fee & Charles J Hadlock & Jing Huang & Joshua R Pierce, 2018. "Robust Models of CEO Turnover: New Evidence on Relative Performance Evaluation," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 7(1), pages 70-100.
    • Handle: RePEc:oup:rcorpf:v:7:y:2018:i:1:p:70-100.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfx018
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    Cited by:

    1. Iwasaki, Ichiro & Ma, Xinxin & Mizobata, Satoshi, 2020. "Corporate ownership and managerial turnover in China and Eastern Europe: A comparative meta-analysis," Journal of Economics and Business, Elsevier, vol. 111(C).
    2. Tang, Yuehua, 2018. "When does competition mitigate agency problems?," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 258-274.
    3. Raphael Flepp & Pascal Flurin Meier, 2024. "Struck by Luck: Noisy Capability Cues and CEO Dismissal," Working Papers 389, University of Zurich, Department of Business Administration (IBW).
    4. Qin, Bo & Yang, Lu, 2022. "CSR contracting and performance-induced CEO turnover," Journal of Corporate Finance, Elsevier, vol. 73(C).
    5. Jian, Jianhui & Li, Huaqian & Meng, Leah & Zhao, Chunxiang, 2020. "Do policy burdens induce excessive managerial perks? Evidence from China’s stated-owned enterprises," Economic Modelling, Elsevier, vol. 90(C), pages 54-65.

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