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CEO turnover and volatility under long-term employment contracts

Cziraki, Peter and Xu, Moqi (2020) CEO turnover and volatility under long-term employment contracts. Journal of Financial and Quantitative Analysis, 55 (6). 1757 - 1791. ISSN 0022-1090

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Identification Number: 10.1017/S0022109019000632


We study the role of the contractual time horizon of chief executive officers (CEOs) for CEO turnover and corporate policies. Using hand-collected data on 3,954 fixed-term CEO contracts, we show that remaining time under contract predicts CEO turnover. When contracts are close to expiration, turnover is more likely and is more sensitive to performance. We also show a positive within-CEO relation between remaining time under contract and firm risk. Our results are similar across short and long contracts and are driven neither by firm or CEO survival, nor technological cycles. They are consistent with incentives to take long-term projects with interim volatility.

Item Type: Article
Official URL:
Additional Information: © 2019 Michael G. Foster School of Business, University of Washington
Divisions: Finance
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J63 - Turnover; Vacancies; Layoffs
Date Deposited: 08 May 2019 08:12
Last Modified: 20 Jun 2024 07:15

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