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Timely vs. delayed CEO turnover

Author

Listed:
  • Kuntara Pukthuanthong

    (University of Missouri)

  • Saif Ullah

    (Concordia University)

  • Thomas J. Walker

    (Concordia University)

  • Xuan Wu

    (Concordia University)

Abstract

This paper investigates changes in company performance following timely versus delayed CEO resignations due to financial wrongdoings. A timely resignation is proactively pushed by the company, and a delayed resignation is driven by investigations initiated by the SEC or other regulatory authorities. Our results show significant negative abnormal returns following the announcement of CEO resignations. In addition, compared with timely resignations, delayed resignations experience a larger and longer lasting negative stock market reaction. This suggests that CEO resignations due to financial wrongdoings are not perceived as good news by investors, and the delayed resignations could make investors lose more confidence, possibly because of worries about the ineffective corporate governance and supervision mechanism. We have found a significant negative relationship between CEO-chairman duality and the timeliness of CEO resignations. Our results have important implications for investors and policy makers.

Suggested Citation

  • Kuntara Pukthuanthong & Saif Ullah & Thomas J. Walker & Xuan Wu, 0. "Timely vs. delayed CEO turnover," Information Systems Frontiers, Springer, vol. 0, pages 1-11.
    • Handle: RePEc:spr:infosf:v::y::i::d:10.1007_s10796-017-9754-2
    DOI: 10.1007/s10796-017-9754-2
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    1. Douglas Cumming & Sofia Johan & Denis Schweizer, 2017. "Information systems, agency problems, and fraud," Information Systems Frontiers, Springer, vol. 19(3), pages 421-424, June.

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    More about this item

    Keywords

    Duality; Financial wrongdoing; CEO turnover; CEO resignations;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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