Ceo Turnover Research Papers - Academia.edu (original) (raw)

This paper examines share price behaviour surrounding announcements of CEO departures from UK firms listed on the All Share Index between 1990 and 1995. We find that many firms choose not to announce CEO departures, and that these firms have poorer performance records, and higher chances of future failure, than those firms who officially announce CEO turnover to the London Stock Exchange. The market reacts negatively to announcements of top executive departures, especially when the CEO is dismissed or leaves to take up another job. Share price reactions to the disclosure of top executive departure are significantly affected by the financial risk of the firm and whether the board announces a replacement CEO. D

- by
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- Corporate Governance, Corporate Finance, Ceo Turnover, Financial Risk

We examine the impact of CEO turnover announcements on bondholder wealth, stockholder wealth, and overall firm value. Using publicly traded data for the period from 1973 to 2000, we find evidence consistent with both the wealth transfer and signaling hypotheses. Specifically, we find that CEO turnover events are associated with lower bondholder values, higher stockholder values, and that net changes in firm value are a function of turnover type (forced vs voluntary and outside vs inside firm replacements) and the riskiness of the firm's debt (investment vs noninvestment grade). Overall, the results contribute to the understanding of the effects of corporate governance mechanisms, of which CEO turnover is an extreme form, on bondholders. JEL Classification: G34; G14

- by John Adams
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- Applied Mathematics, Corporate Governance, Ceo Turnover, Firm Value

This paper uses a unique dataset from Denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance. We focus on the decision to appoint either a family or external chief executive officer (CEO). The paper uses variation in CEO succession decisions that result from the gender of a departing CEO's firstborn child. This is a plausible instrumental variable (IV), as male first-child firms are more likely to pass on control to a family CEO than are female first-child firms, but the gender of the first child is unlikely to affect firms' outcomes. We find that family successions have a large negative causal impact on firm performance: operating profitability on assets falls by at least four percentage points around CEO transitions. Our IV estimates are significantly larger than those obtained using ordinary least squares. Furthermore, we show that family-CEO underperformance is particularly large in fast-growing industries, industries with highly skilled labor force and relatively large firms. Overall, our empirical results demonstrate that professional, non-family CEOs provide extremely valuable services to the organizations they head.

- by Francisco Perez
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- Economics, Decision Making, Governance, Firm Performance

Research Question/Issue: We hypothesize that surrounding CEO turnover events a top manager's stock ownership in the firm signals to the board information about his or her privately known ability to run the company. As a consequence, the outcome of a CEO succession is affected by the managers' ownership choices, which therefore depend on their career concerns.

- by Arya En
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- Ceo Turnover, Asymmetric Information, Portfolio Choice, Portfolio allocation

CEO compensation varies widely, even within industries. In this paper, we investigate whether differences in skill explain these differences in CEO pay. Using the idea that skilled CEOs should be more likely to continue prior good performance and more likely to reverse prior poor performance, we develop a new methodology to detect whether skill is related to pay. We find that highly paid CEOs are more skilled than their less well paid peers when pay is performancebased and when there is a large shareholder. This detected link between pay and skill is strong even when we examine industry-wide declines: highly paid CEOs are more likely to reverse the firm's fortunes. We also examine CEO turnovers and show that the firm's post-turnover performance is related to differences between the two CEO's pay levels. These results highlight conditions where pay and skill are linked, and hence identify firms where high pay appears to have no justification.

- by lewis kornhauser
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- CEO compensation, Law and Economics, Ceo Turnover

Good corporate governance is an important step in building market confidence and encouraging more stable, long-term international investment flows. Many countries see better corporate governance practices as a way to improve economic dynamism and thus enhance overall economic performance. This paper sets out to further develop our understanding of corporate governance and its effects on corporate performance and economic performance. In doing so, it addresses some of the underlying factors that promote efficient corporate governance, and examines some of the economic implications associated with various corporate governance systems. I provide an framework for understanding how corporate governance can affect corporate performance. In the wake of a literature survey, I find that corporate governance matters for economic performance, insider ownership matters the most, outside ownership concentration destroys market value, direct ownership being superior to indirect.

- by Anup Agrawal
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- Finance, Economics, Corporate Governance, Corporate Finance

We examine the causes and consequences of falsified financial statements in China. Using bivariate probit regression analysis, we find that firms with high debt and that plan to make equity issues are more likely to manipulate their earnings and thus have to restate their financial reports in subsequent years. We also find that corporate governance structures have an effect on the occurrence and detection of falsified financial statements. There are significant negative consequences to financial misrepresentations. Restating firms suffer negative abnormal stock returns, increases in their cost of capital, wider bid-ask spreads, a greater frequency of modified audit opinions, and greater CEO turnover. We also find that firms located in highly developed regions suffer more severe consequences when they manipulate their accounts.

- by Michael Firth and +1
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- Corporate Governance, Corporate Finance, Regional development, Financial Reporting

The likelihood and speed of forced CEO turnover â€“ but not voluntary turnover â€“ are positively related to a firm's earnings management. These patterns persist in tests that consider the effects of earnings restatements, regulatory enforcement actions, and the possible endogeneity of CEO turnover and earnings management. The relation between earnings management and forced turnover occurs both in firms with

- by Sonali Hazarika
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- Financial Economics, Corporate Governance, Earnings Management, Ceo Turnover

Using a large hand-collected dataset from 2001 to 2006, we find that activist hedge funds in the U.S. propose strategic, operational, and financial remedies and attain success or partial success in two thirds of the cases. Hedge funds seldom seek control and in most cases are nonconfrontational. The abnormal return around the announcement of activism is approximately 7%, with no reversal during the subsequent year. Target firms experience increases in payout, operating performance, and higher CEO turnover after activism. Our analysis provides important new evidence on the mechanisms and effects of informed shareholder monitoring.

- by Randall Thomas
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- Finance, Corporate Governance, Hedge Funds, Firm Performance

How is corporate governance measured? What is the relationship between corporate governance and performance? This paper sheds light on these questions while taking into account the endogeneity of the relationships among corporate governance, corporate performance, corporate capital structure, and corporate ownership structure. We make three additional contributions to the literature: First, we find that better governance as measured by the Gompers, Ishii, and Metrick [Gompers,

- by sheeba kapil
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- Finance, Economics, Accounting, Corporate Governance

Previous research has documented that the external control market disciplines managers who make valuereducing acquisitions. This paper finds that internal control mechanisms also discipline managers who make value-destroying acquisitions. We find a strong inverse relation between the returns to acquiring firms and the likelihood that their CEOs are subsequently fired. No significant relation exists between the probability that "bad bidders" get fired and various corporate governance characteristics, including the size and structure of boards. The results indicate that internal governance mechanisms discipline managers who stray from value-maximization. It also suggests that firms "choose" these mechanisms optimally such that no empirical relation exists between governance structure and the probability that bad bidders are fired.

- by Mengxin Zhao
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- Corporate Governance, Internal Control, Ceo Turnover, Market Discipline

The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.

- by Daniel Gao
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- China, Public sector accounting, Ceo Turnover, Empirical evidence

We examine the relation between bidder returns and the probability of chief executive officer (CEO) turnover in acquiring firms. Using a sample of 714 acquisitions during 1990 to 1998, we find that 47% of CEOs of acquiring firms are replaced within 5 years, including 27% by internal governance, 16% by takeovers, and 4% by bankruptcy. A significant inverse relation exists between bidder returns and the likelihood of CEO turnover. This relation is not associated with governance structure. It also is not significantly different in stock versus cash acquisitions, which appears to be inconsistent with Shleifer and Vishny's theory of "stock market driven" acquisitions.

- by Mengxin Zhao
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- Finance, Stock Market, Ceo Turnover, Governance Structure

- by KAYODE SAMUEL
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- Finance, Economics, Corporate Governance, Corporate Finance

- by Kenneth Lehn
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- Finance, Governance, Stock Market, Turnover

This paper examines the relationship between the replacement of CEO's and corporate performance in Danish firms. We use a unique longitudinal data set to test the hypothesis that CEO turnover is inversely related to firm performance. Evidence is provided using several measures of corporate performance and corporate governance. The results are consistent with the principal-agent theory; The threat of turnover ensures that CEO's act in the interest of the shareholders. Moreover, the status of the chairman of the board and family ties within the management and ownership of the company strengthen the relationship between CEO turnover and firm performance.

- by Mette Lausten
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- Industrial Organization, Corporate Governance, Economic Theory, Ownership Structure
- by Yeukai Ngwarati
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- Finance, Economics, Accounting, Corporate Governance

Investments in research and development (R&D) are one of the most crucial decisions that senior leadership teams can make in the management of media firms. An extensive body of research indicates that some firms are more ‘culturally orientated’ toward R&D investments and see it as the key driver in delivering new products and services, which in turn, leads to future competitive advantage and improved market performance (Hurley and Hult, 1998; Han et al, 1998, Ruef, 2002; Langerak et al, 2004; Meyerson, 2016; McKelvey and Saemundsson, 2018; Oliver, 2019).
This firm orientation toward R&D and innovation is largely determined by media firm CEOs who set organizational vision, drive investment decisions and strategic actions toward innovation (Hensmans, et al, 2013; Reeves et al, 2015; Kung, 2017; and Oliver, 2018).

- by Prof. Dr. John J Oliver
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- Innovation Policy, Media Management, Research & Development, CEO

- by Daniel Gao
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- China, Public sector accounting, Ceo Turnover, Empirical evidence

- by thanh Tung
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- Finance, Economics, Accounting, Corporate Governance

Some argue that managers over-invest in corporate social responsibility (CSR) activities to build their personal reputations as good global citizens. Others claim that CEOs strategically choose CSR activities to reduce the probability of CEO turnover in a future period through indirect support from activists. Still others assert that firms use CSR activities to signal their product quality. We find that firms use governance mechanisms, along with CSR engagement, to reduce conflicts-of-interest between managers and non-investing stakeholders. Employing a large and extensive sample of firms within Russell 2000, S&500 and Domini 400 indices during the 1993-2004 period, we find that consistent with the conflict-resolution hypothesis, the CSR choice is positively associated with governance characteristics, including board independence, institutional ownership, and analyst following. In addition, after correcting for endogeneity of CSR engagement, our results show that CSR engagement positively influences operating performance and firm value, supporting the conflict-resolution hypothesis as opposed to the over-investment and strategic choice arguments. We find only a weak support of the productsignaling hypothesis as a major motive of CSR engagement.

- by Maretno A Harjoto
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- Marketing, Business Ethics, Applied Ethics, Corporate Social Responsibility

Using the first large-scale sample of hedge fund activism, from 2004-05, we show that activist hedge funds resemble value investors and that the announcement of hedge fund activism generates statistically significant abnormal returns, in the range of 5-7% for a 20-day window, with results that are robust for different buy-and-hold periods. Target firms have significantly lower market value relative to book value, and are profitable with strong operating cash flows.

- by Wei Jiang
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- Finance, Corporate Governance, Hedge Funds, Firm Performance

Prior CEO turnover literature characterizes the board's decision as a choice between retaining versus replacing the CEO. We focus instead on the CEO's decision rights and introduce a third option in which the incumbent CEO is removed but retained on the board for an extended period, which we call Retention Light. Firms may benefit from Retention Light because former CEOs possess unique monitoring and advising abilities, but the former CEO could also exploit available decision rights for personal benefit. A Retention Light CEO's decision rights generally exceed those of CEOs who exit the firm entirely but fall short of the rights of a retained CEO. We find that when prior firm performance is better, the former CEO is more likely to be retained on University. This paper has benefited from the helpful comments of an anonymous referee, Doug Skinner (the editor), the board (Retention Light) than to exit the firm. However, this relation is weaker when the CEO reaches normal retirement age at which time CEO power becomes more important. We also provide evidence on how the nature of the CEO's bargaining power varies with his personal attributes and board characteristics in its influence on the Retention Light decision. Retention Light firms are more likely than CEO-exit firms to select a successor CEO with relatively weaker bargaining power. Finally, Retention Light involving a nonfounder CEO is negatively associated with the firm's postturnover financial performance. Overall, Retention Light is a distinct CEO turnover option that has important consequences for board decisions and firm performance.

- by John Evans
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- Accounting, Firm Performance, Ceo Turnover, Financial Performance

Available online 4 April 2008 How is corporate governance measured? What is the relationship between corporate governance and performance? This paper sheds light on these questions while taking into account the endogeneity of the relationships among corporate governance, corporate performance, corporate capital structure, and corporate ownership structure. We make three additional contributions to the literature: First, we find that better governance as measured by the Gompers, Ishii, and Metrick [Gompers, P.A., Ishii, J.L., and Metrick, A., 2003, Corporate governance and equity prices, Quarterly Journal of Economics 118(1), 107–155.] and Bebchuk, Cohen and Ferrell [Bebchuk, L., Cohen, A., and Ferrell, A., 2004, What matters in corporate governance?, Working paper, Harvard Law School] indices, stock ownership of boardmembers, and CEO-Chair separation is significantly positively correlated with better contemporaneous and subsequent operating performance. Second, contrary to claims in...

- by Sanjai Bhagat
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- Finance, Economics, Corporate Governance, Corporate Finance
- by Iram Ansari
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- Business, Earnings Management, Family Firms, Social Science Research Network

Good corporate governance plays a crucial role in obtaining market confidence in supporting and facilitating the long-term international investment. Governments of many countries believe that the existence of best practices of corporate governance is a way to boost the economy and thus improve the performance of the national economy. In this article we intend to increase the understanding regarding corporate governance and the effects that good corporate governance has on company performance and on economic performance in general. In this paper we investigated which factors determine effective corporate governance. Also, we tried to provide a framework for understanding how a good or a bad corporate governance can affect corporate performance. After a literature review, we find that corporate governance matters for economic performance, insider ownership matters the most, outside ownership concentration destroys market value, direct ownership being superior to indirect.

- by Tung nguyen thanh
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- Finance, Economics, Corporate Governance, Corporate Finance

We propose a model in which firms use corporate governance as part of an optimal compensation scheme: better governance incentivizes managers to perform better and thus saves on the cost of providing pay for performance. However, when managerial talent is scarce, firms compete to attract better managers. This reduces an individual firm's incentives to invest in corporate governance because managerial rents are determined by the manager's reservation value when employed elsewhere and thus by other firms' governance. In equilibrium, better managers end up at firms with weaker governance, and conversely, better-governed firms have lower-quality managers. Consistent with these implications, in a sample of US firms, we show that (i) better CEOs are matched to firms with weaker corporate governance and more so in industries with stronger competition for managers, and, (ii) corporate governance is more likely to change when there is CEO turnover, with governance weakening when the incoming CEO is better than the departing one.

- by Paolo Volpin
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- Quality Management, Corporate Governance, Executive Compensation, Externalities

Business exit has implications for a firm's corporate strategy. Two types of exit events are distinguished: those that involve strategic change and those that are status quo-preserving. This study investigates the impact of CEO turnover and succession on strategic versus status quo-preserving business exits. Based on a sample of CEO turnover and succession events and subsequent business exits of German

- by Thomas Mellewigt
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- Corporate Strategy, Ceo Turnover

This thesis examines the effect of CEO attributes and company fundamentals on company performance in CEO turnovers. The analyses were performed on a sample of 899 CEO turnovers between 2003 and 2009 in companies listed on the S&P 1500 composite index in the US. A six-step model exploring various perspectives of the CEO turnover in the period [Event day -1/+2 years] finds that the market, on average, yields negative announcement return and then positive cumulative abnormal return in the subsequent two years. Our main finding is that the market reacts to changes made to the company fundamentals, and that it generally rewards changes in company fundamentals contributing to enhance the robustness of the companies’ balance sheets. We find that MBAs tend to run the operations with lesser margins, in terms of balance sheet robustness. Nonetheless, the different behavior between MBAs and engineers does not explain the market reaction. Even though MBAs and engineers have different fiscal strategies in the way they operate companies, the abnormal return is not sensitive to hiring a CEO with these educational profiles alone. It is rather the experience, and the fact that CEOs, on average, are able to introduce changes that fit the companies’ needs that appear to generate abnormal reactions in stock value. We also find that positive abnormal stock return in the transition year materializes in increased ROA and EBITDA margin in the two subsequent years. This confirms that the market is able to identify CEO turnovers that prove successful. This thesis confirms several previous findings within the research field of CEO turnover, and adds to the understanding of the underlying reasons for market reactions to CEO turnovers.

- by Peter Riise and +1
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- Ceo Turnover, Company Performance, Abnormal Returns
- by Dr. Dimitrios Koufopoulos
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- Business, Corporate Governance, Firm Performance, Ceo Turnover

This paper seeks to understand the structure of corporate networks in the period following the dissolution of Deutschland AG ("Germany Inc."). For this purpose, affiliation networks among chief executive officers (CEOs) that are based on common membership in various societal organizations will be examined. I apply an innovative mix of methods for studying a sample of CEOs from the 100 top companies in Germany in the 2010s. Based on social network analysis, I show that the overall affiliation network has all features of a small-world network, i.e., a high clustering coefficient and a short path length among the CEOs. The average degree of separation among German CEOs is only two steps. Another innovative contribution of this paper is its study of the linkage between affiliation network features and patterns of corporate recruitment. Using multiple correspondence analysis, I show that different subgroups of the overall affiliation network have their specific network characteristics and recruitment patterns. Within the network, managers from automotive and technical engineering often assume brokerage positions, while managers from the trade branch are largely isolated. This study shows that the affiliation networks and corporate recruitment patterns are interlinked; the transformation of corporate networks is a dynamic outcome of interrelations among different subgroups within the network, each with distinct educational, professional, and network characteristics.

- by Elena Semenova
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- Social Networks, Corporate Governance, Ceo Turnover

Recent research has documented large di!erences among countries in ownership concentration in publicly traded "rms, in the breadth and depth of capital markets, in dividend policies, and in the access of "rms to external "nance. A common element to the explanations of these di!erences is how well investors, both shareholders and creditors, are protected by law from expropriation by the managers and controlling shareholders of "rms. We describe the di!erences in laws and the e!ectiveness of their enforcement across countries, discuss the possible origins of these di!erences, summarize their consequences, and assess potential strategies of corporate governance reform. We argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank-centered and market-centered "nancial systems.

- by Sary Levy
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- Law, Financial Economics, Property Rights, Accounting

China: Evidence from New Micro Data * Using comprehensive financial and accounting data on China's listed firms from 1998 to 2002, augmented by unique data on CEO turnover, ownership structure and board characteristics, we estimate Logit models of CEO turnover. We find consistently for all performance measures including both stock return and various accounting measures that: (i) overall, CEO turnover is significantly and inversely related to firm performance though the magnitude of the relationship is modest; (ii) CEO turnover-performance link is stronger when the percentage of company shares owned by the largest shareholder is larger. Furthermore, insofar as stock performance is concerned, (iii) turnover-performance link is found to be weaker for listed firms still controlled by the state; (iv) the appointment of independent directors enhances turnover-performance link; (v) the listing suspension mechanism, i.e., the ST designation, adopted by China's securities regulatory agency appears to be effective in improving turnover-performance tie; and (vi) listed firms with CEOs holding additional positions in the controlling shareholders have weaker turnover-performance link. Consistent with the "law and finance" approach to corporate governance and the literature on economic transition, our findings suggest that any fundamental improvement in China's corporate governance will require a broad program that encompasses not only privatization but also laws and their effective implementation to provide better protection for investors.

- by Takao Kato
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- Corporate Governance, China, Comparative Economics, Firm Performance

The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People's Republic of China. Somewhat akin to the SEC in the U.S., the CSRC carries out investigations to... more

- by Daniel Gao
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- China, Public sector accounting, Ceo Turnover, Empirical evidence

We examine firms that reprice their executive stock options and find little evidence that repricing reflects managerial entrenchment or ineffective governance. Repricing grants are economically significant, but there is little else unusual about compensation in repricing firms. Repricers tend to be smaller, younger, rapidly growing firms that experience a deep, sudden shock to growth and profitability. They are also more concentrated in the technology, trade, and service sectors and have smaller boards of directors. Repricers have abnormally high CEO turnover rates, which is inconsistent with the entrenchment hypothesis. Over 40% of repricers exclude the CEO's options when they reprice. r

- by N. Chidambaran
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- Financial Economics, Corporate Governance, Profitability, Ceo Turnover

This study argues that an evaluation of the relationship between CEO turnover and corporate performance can be usefully approached in three steps. (1) An empirical longitudinal analysis of 88 German corporations which had experienced a change in CEO shows that di!erent kinds of CEO turnover are associated with di!erent developments in published performance during the succession period. (2) Using a structural equations model it is possible to demonstrate the aptness of a hypothesis on performance variation based on agency theory and using empirical data on involuntary CEO turnover. (3) By introducing an indirect method of measurement it is shown that CEO`in#uencea explains a substantial part of the observed variation in performance during the succession period.

- by Jens Leker
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- Economics, Performance Measurement, Agency Theory, Business and Management

We find that relative to fundamentals, dual-class firms trade at lower prices than do singleclass firms both at the IPO date and for at least the subsequent five years. The lower prices attached to dual-class firms do not foreshadow abnormally low stock or accounting returns. However, CEO turnover events do occur less frequently among dual-class firms and the circumstances surrounding CEO turnover vary between single-and dual-class companies. When dual-class firms unify their share classes statistically and economically significant value gains occur. Collectively, our results suggest that the governance associated with dual-class equity influences the pricing of dual-class firms.

- by Scott Smart
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- Governance, Initial public offering, Applied Economics, Ownership Structure

This paper explores how prominent VCs affect CEO replacement in startups. Defining prominence using eigenvector centrality, we employ matching methods and instrumental variables to show that start-up CEO replacement occurs more often, and faster, when prominent VCs participate. We further explore these VCs' comparative advantage in managing CEO turnover, finding that the prominent VC effects increase as replacement costs rise, such as when incumbent CEOs are entrenched or possess specialized technology know-how, or startups are early stage. When prominent VCs participate, replacement CEOs are disproportionately experienced outsiders-external hires who possess prior startup-CEO experience. Our results reveal that CEO turnover is associated with increases in startups' ex post innovation and survival performance, with experienced outsider CEO replacements showing the strongest survival rates.

- by annamaria conti and +1
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- Management of Innovation, Venture Capital, CEO, Ceo Turnover

This paper examines analysts' earnings forecasts during the period of uncertainty following a change of chief executive officer (CEO). It distinguishes between forced and non-forced CEO changes, and examines whether analysts utilize their information advantage to reduce the heightened uncertainty of a forced change of CEO. Examining a sample of Australian companies followed by analysts between 1999 and 2009, we find that forecasting accuracy is lower and earnings forecasts are more optimistic for firms experiencing forced CEO turnover compared to firms not undergoing such a change. However, dispersion is not statistically different. The results suggest that forced CEO turnover events provide a challenge to the forecasting environment for analysts. During CEO changes, investors should be aware that forecasts are less accurate and have an optimistic bias.

- by Xiaomeng Chen
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- Ceo Turnover, Financial Analyst

- by sheeba kapil
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- Finance, Economics, Accounting, Corporate Governance

This paper presents several theories to achieve a better understanding of corporate governance structures and their operations in a two-tier-board corporate governance structure. The author also analyses transitional economies using the case of Vietnam. The author investigates the influence of independent directors upon the probability of CEO turnover as well as the sensitivity of the link between performance and turnover. The findings show that non-executive directors are not always independent. At the same time, independent directors have a vital role to play in making decisions concerning CEO dismissal. These directors also reduce the effects of CEO ownership and CEO duality upon the probability of CEO turnover. In summation, the research found that performance and CEO age constitute key factors in CEO turnover, regardless of the corporation or board size.

- by Dr. Dimitrios Koufopoulos
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- Business, Corporate Governance, Firm Performance, Ceo Turnover

This paper examines the input and output additionality of public R&D subsidies in Western and Eastern Germany. We estimate the impact of public R&D grants on firms' R&D and innovation input. Based on the results of this first step we compare the impact of publicly funded private R&D on innovation output with the output effect of R&D funded out of firms' own pockets. We employ microeconometric evaluation methods using firm-level data derived from the Mannheim Innovation Panel. Our results point towards a large degree of additionality in public R&D grants with regard to innovation input measured as R&D expenditures and innovation expenditures, as well as with regard to innovation output measured by patent applications. Input additionality has been more pronounced in Eastern Germany during the transition period than in Western Germany. However, R&D productivity is still larger for the established Western German innovation system than for Eastern Germany. Hence, a regional redistribution of public R&D subsidies might improve the overall innovation output of the German economy.

- by Tor Eriksson
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- Transition Economics, Applied Economics, Labour Market, Executive Compensation

Special Administrative Region of China), mnrikit@ust.hk P rior reviews of the CEO turnover and succession literature suggest that empirical findings on organizational implications continue to be equivocal. In this paper, we develop a conceptual framework for examining the impact of CEO turnover and succession on organizational capabilities. Using the social network perspective as a theoretical lens, we identify conditions in which CEO turnover is expected to influence organizational exploration and exploitation capabilities. We also identify contingencies under which CEO succession will moderate the impact of CEO turnover on organizational capabilities. Our framework provides a useful lens through which to view the consequences of CEO turnover and succession and sheds some light on the equivocal findings to date.

- by Riki Takeuchi
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- Marketing, Social Capital, Organization Science, Business and Management

We document changes in compensation structure following CEO turnover and relate them to future performance. Compared to outgoing CEOs, incoming CEOs derive a significantly greater percentage of their compensation from option grants and new stock grants. The voluntary turnover sample shows similar changes in compensation structure while the forced turnover sample results suggest that new stock grants drive the significant increase in incentive compensation following turnover. Post-turnover performance is positively associated with new stock grants as a percentage of total compensation in the full sample and when analyzing forced and voluntary turnovers separately. We find limited evidence that future operating income is positively associated with option grants following forced turnover. Post-turnover improvement in operating income is positively associated with an increase in new stock grants for the incoming relative to the outgoing CEO.

- by D. Blackwell and +1
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- CEO compensation, Firm Performance, Quantitative Finance, Mathematical Sciences
- by M Banu Durukan and +1
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- Corporate Governance, Performance Management, Applied Economics, Economics for Business and Management.

Using a large hand-collected data set from 2001 to 2006, we find that activist hedge funds in the United States propose strategic, operational, and financial remedies and attain success or partial success in two-thirds of the cases. Hedge funds seldom seek control and in most cases are nonconfrontational. The abnormal return around the announcement of activism is approximately 7%, with no reversal during the subsequent year. Target firms experience increases in payout, operating performance, and higher CEO turnover after activism. Our analysis provides important new evidence on the mechanisms and effects of informed shareholder monitoring. Copyright (c) 2008 The American Finance Association.

- by Randall Thomas
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- Finance, Corporate Governance, Hedge Funds, Firm Performance

- by Jens Leker
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- Economics, Performance Measurement, Agency Theory, Business and Management

This paper examines Wall Street Journal news stories about 79 firms that forced CEO turnover and a matched sample of firms that did not force CEO turnover. In the two years prior to turnover, firms in the forced-turnover sample were the subjects of 76% more news stories about poor firm performance despite being from the same industry, of similar size, and similar performance as a sample of matched firms. Overall, the evidence suggests that scrutiny of poor firm performance by the financial press increases the likelihood of forced CEO turnover.

- by David Whidbee
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- Applied Mathematics, Corporate Governance, Firm Performance, Ceo Turnover