Engel/Hayes/Wang and Farrell/Whidbee provide new evidence on how firms weight alternative performance measures in making CEO retention and replacement decisions. While their results are statistically significant, firm performance continues to explain very little of the variation in CEO turnover. I argue we have probably reached a point of diminishing returns in estimating logit models that focus on the relation between CEO turnover and firm performance measures. We will have to consider other less-explored issues to increase our understanding of CEO turnovers and replacements. Analyzing age-related issues is one example.

Agency theory implies that asset ownership and decision authority are complements. Using 1998 data from Texas commercial banks, we test whether the likelihood of local ownership of bank offices increases with the importance of granting local managers greater decision authority (for example, due to location or customer base). Our empirical evidence is consistent with this hypothesis. It suggests that complementarities between strategy and organizational structure can foster differentiation among firms in terms of location, customers, and products. It also supports the growing view that small locally-owned banks have a comparative advantage over large banks within specific environments.