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CEO turnover and relative performance evaluation

Jenter, Dirk ORCID: 0000-0003-4168-9329 and Kanaan, Fadi (2015) CEO turnover and relative performance evaluation. Journal of Finance, 70 (5). 2155 - 2184. ISSN 0022-1082

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Identification Number: 10.1111/jofi.12282


This paper shows that CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a hand-collected sample of 3,365 CEO turnovers from 1993 to 2009, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry and, to a lesser extent, after bad market performance. A decline in industry performance from the 90th to the 10th percentile doubles the probability of a forced CEO turnover.

Item Type: Article
Official URL:
Additional Information: © 2015 The American Finance Association
Divisions: Finance
Subjects: H Social Sciences > HG Finance
Date Deposited: 12 Nov 2015 15:22
Last Modified: 20 Oct 2021 02:18

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