{"title":"Endogenously Determined CEO Turnover: The Struggle for Continuance in Listed and Unlisted Firms","authors":"Esteban Lafuente, Miguel García-Cestona","doi":"10.2139/ssrn.1425304","DOIUrl":null,"url":null,"abstract":"This paper examines the relationship between performance and CEO turnover in Spanish listed and large unlisted firms for the period 1998-2004. Following the Bover and Arellano (1997) approach, we carry out a dynamic binary choice model where the decision to replace a CEO includes lags of the dependent variable, previous performance, and previous changes in the chairman position as endogenous determinants of this governance intervention. We find that for both listed and unlisted firms, previous performance changes are negatively correlated with CEO turnover. Furthermore, listed and unlisted firms follow different paths when taking decisions linked to CEO replacements: whereas unlisted firms are less likely to replace a recently hired CEO, listed companies appear more impatient. Finally, ownership concentration and the presence of banks are also important determinants of CEO turnover decisions, but only for listed firms. Our results give support to the growing call by academics who highlight the importance of controlling endogeneity to correctly examine the determinants of governance interventions.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":"293 2 1","pages":""},"PeriodicalIF":2.2000,"publicationDate":"2009-06-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Journal of Finance","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.2139/ssrn.1425304","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This paper examines the relationship between performance and CEO turnover in Spanish listed and large unlisted firms for the period 1998-2004. Following the Bover and Arellano (1997) approach, we carry out a dynamic binary choice model where the decision to replace a CEO includes lags of the dependent variable, previous performance, and previous changes in the chairman position as endogenous determinants of this governance intervention. We find that for both listed and unlisted firms, previous performance changes are negatively correlated with CEO turnover. Furthermore, listed and unlisted firms follow different paths when taking decisions linked to CEO replacements: whereas unlisted firms are less likely to replace a recently hired CEO, listed companies appear more impatient. Finally, ownership concentration and the presence of banks are also important determinants of CEO turnover decisions, but only for listed firms. Our results give support to the growing call by academics who highlight the importance of controlling endogeneity to correctly examine the determinants of governance interventions.
期刊介绍：
The European Journal of Finance publishes a full range of research into theoretical and empirical topics in finance. The emphasis is on issues that reflect European interests and concerns. The journal aims to publish work that is motivated by significant issues in the theory or practice of finance. The journal promotes communication between finance academics and practitioners by providing a vehicle for the publication of research into European issues, stimulating research in finance within Europe, encouraging the international exchange of ideas, theories and the practical application of methodologies and playing a positive role in the development of the infrastructure for finance research.
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