CEO turnover–performance sensitivity in private firms
Date of Issue2017
College of Business (Nanyang Business School)
We compare chief executive officer (CEO) turnover in public and large private firms. Public firms have higher turnover rates and exhibit greater turnover–performance sensitivity (TPS) than private firms. When we control for pre-turnover performance, performance improvements are greater for private firms than for public firms. We investigate whether these differences are due to differences in quality of accounting information, the CEO candidate pool, CEO power, board structure, ownership structure, investor horizon, or certain unobservable differences between public and private firms. One factor contributing to public firms’ higher turnover rates and greater TPS appears to be investor myopia.
Journal of Financial and Quantitative Analysis
© 2017 Michael G. Foster School of Business, University of Washington. This paper was published in Journal of Financial and Quantitative Analysis and is made available as an electronic reprint (preprint) with permission of Michael G. Foster School of Business, University of Washington. The published version is available at: [http://dx.doi.org/10.1017/S0022109017000126]. One print or electronic copy may be made for personal use only. Systematic or multiple reproduction, distribution to multiple locations via electronic or other means, duplication of any material in this paper for a fee or for commercial purposes, or modification of the content of the paper is prohibited and is subject to penalties under law.