CEO Turnover and Director Reputation

Item Type Monograph (Working Paper)

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 25 Mar 2021 17:01


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

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