IDEAS home Printed from https://ideas.repec.org/p/bsl/wpaper/2010-13.html
   My bibliography  Save this paper

Is a CEO Turnover Good or Bad News?

Author

Listed:
  • Kind, Axel
  • Schläpfer, Yves

    () (University of Basel)

Abstract

We investigate the information content of CEO turnovers by analyzing abnormal stock returns and the operating performance around the announcement date. The sample consists of 208 CEO turnovers between January 1998 and June 2009 for companies belonging to the Swiss Performance Index. In line with previous studies, outside successions and forced turnovers yield positive and significant abnormal returns. However, a forced turnover does not per se represent a positive signal to shareholders. On the contrary, investors seem to critically assess the quality of the board’s firing decision by considering the quality of the departing manager. When an outperforming CEO is dismissed or forced to leave - an event that occurs in as many as 33% of all dismissals in our sample - shareholders appear to disesteem the board’s decision. This finding is confirmed in multivariate cross-sectional regressions and is robust to time subperiods and alternative test statistics. Finally, the operating performance significantly increases (decreases) in the years following (preceding) CEO turnovers and reflects on average the short-term stock-price reaction around the announcement date.

Suggested Citation

  • Kind, Axel & Schläpfer, Yves, 2010. "Is a CEO Turnover Good or Bad News?," Working papers 2010/13, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2010/13
    as

    Download full text from publisher

    File URL: https://edoc.unibas.ch/61457/1/20180307114104_5a9fc1c05d619.pdf
    Download Restriction: no

    More about this item

    Keywords

    Corporate Finance;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bsl:wpaper:2010/13. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (WWZ). General contact details of provider: http://edirc.repec.org/data/wwzbsch.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.