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What do boards consider in CEO performance evaluation? Evidence from executive turnover

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  • Choi, Seungho
  • Xu, Jing

Abstract

This study investigates whether CEOs are rewarded for actively making changes. We construct a comprehensive executive dataset from SEC filings and use non-CEO executive turnover to proxy for changes. We find that after executive turnovers, CEOs are less likely to be dismissed, and the change is not temporary. In addition, firm performance improves after executive turnovers. The results suggest that when boards of directors evaluate CEOs, they consider whether CEOs can overcome inertia and initiate changes.

Suggested Citation

  • Choi, Seungho & Xu, Jing, 2022. "What do boards consider in CEO performance evaluation? Evidence from executive turnover," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004196
    DOI: 10.1016/j.frl.2022.103214
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    References listed on IDEAS

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    More about this item

    Keywords

    CEO turnover; Top executives; Corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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