CEO Turnover and Director Reputation

Item Type Monograph (Working Paper)
Abstract This paper analyzes the reputational effects of forced CEO turnovers on outside directors. We find that outside directors interlocked to a forced CEO turnover experience a large and persistent increase in withheld votes at subsequent board re-elections relative to non-turnover-interlocked directors. Increases in withheld votes are confined to departures without a successor in place, performance-induced turnovers, and turnovers that occur during the most productive time within a CEO's tenure. Reputational losses are larger for board committee members responsible for hiring and monitoring the ousted CEO and for directors affiliated with the CEO. Involvement in a forced CEO turnover is not associated with a long-term loss in directorships, but lost directorships are replaced by directorships at smaller firms. Our results imply that forced CEO turnovers signal a governance failure at the board level and that investors rely on salient actions to update their beliefs about directors' hidden qualities.
Authors von Meyerinck, Felix; Romer, Jonas & Schmid, Markus
Language English
Keywords CEO turnover, Director re-elections, Director reputation, CEO succession, Corporate governance
Subjects finance
HSG Classification contribution to scientific community
HSG Profile Area SOF - System-wide Risk in the Financial System
Number of Pages 58
Contact Email Address
Depositing User Beatrix Kobelt-Glock
Date Deposited 25 Mar 2021 16:48
Last Modified 20 Jul 2022 17:45


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von Meyerinck, Felix; Romer, Jonas & Schmid, Markus: CEO Turnover and Director Reputation. ,

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