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Top executive turnovers: Separating decision and control rights

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  • Robert Neumann

    (Danske Markets, Danske Bank, Holmens Kanal 2-12, 1092 Copenhagen K, Denmark)

  • Torben Voetmann

    (Cornerstone Research and Finance Department, The Wharton School, 3620 Locust Walk, Steinberg Hall-Dietrich Hall, Suite 2344, Philadelphia, PA 19104-6367, USA)

Abstract

This paper examines the relationship between performance and top executive turnovers using a sample of 81 turnovers and matching companies listed on the Copenhagen Stock Exchange. We find that poor market performance increases the probability of management replacements and that forced layoffs are value-increasing events while voluntary resignations are value-decreasing events. Large shareholders as active monitors, or part of corporate control, are not exhibited in the results. If large shareholders have any influence on CEO turnovers it is not revealed in our data. Indeed, separating control rights from decision rights does not appear to affect managerial turnovers. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1187
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 26 (2005)
Issue (Month): 1 ()
Pages: 25-37

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Handle: RePEc:wly:mgtdec:v:26:y:2005:i:1:p:25-37

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Brickley, James A. & Coles, Jeffrey L. & Jarrell, Gregg, 1997. "Leadership structure: Separating the CEO and Chairman of the Board," Journal of Corporate Finance, Elsevier, Elsevier, vol. 3(3), pages 189-220, June.
  2. Asquith, Paul & Gertner, Robert & Scharfstein, David, 1994. "Anatomy of Financial Distress: An Examination of Junk-Bond Issuers," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(3), pages 625-58, August.
  3. Lausten, M., 1998. "CEO Turnover, Firm Performance and Corporate Governance," Papers, Aarhus School of Business - Department of Economics 98-10, Aarhus School of Business - Department of Economics.
  4. Warner, Jerold B. & Watts, Ross L. & Wruck, Karen H., 1988. "Stock prices and top management changes," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 461-492, January.
  5. Denis, David J. & Denis, Diane K. & Sarin, Atulya, 1997. "Ownership structure and top executive turnover," Journal of Financial Economics, Elsevier, Elsevier, vol. 45(2), pages 193-221, August.
  6. DeAngelo, Harry & DeAngelo, Linda, 1989. "Proxy contests and the governance of publicly held corporations," Journal of Financial Economics, Elsevier, Elsevier, vol. 23(1), pages 29-59, June.
  7. Mark R. Huson, 2001. "Internal Monitoring Mechanisms and CEO Turnover: A Long-Term Perspective," Journal of Finance, American Finance Association, American Finance Association, vol. 56(6), pages 2265-2297, December.
  8. Mikkelson, Wayne H. & Partch, M. Megan, 1997. "The decline of takeovers and disciplinary managerial turnover," Journal of Financial Economics, Elsevier, Elsevier, vol. 44(2), pages 205-228, May.
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Cited by:
  1. Kato, Takao & Long, Cheryl, 2006. "CEO turnover, firm performance, and enterprise reform in China: Evidence from micro data," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 796-817, December.
  2. Kato, Takao & Long, Cheryl, 2006. "CEO Turnover, Firm Performance and Enterprise Reform in China: Evidence from New Micro Data," IZA Discussion Papers 1914, Institute for the Study of Labor (IZA).
  3. Axel Kind & Yves Schläpfer, 2011. "Are Forced Turnovers Good or Bad News?," Working papers, Faculty of Business and Economics - University of Basel 2011/10, Faculty of Business and Economics - University of Basel.

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