Journal of Financial Economics Vol. 18 No. 1 1987
The wealth effects of company initiated management changes
open access
Abstract
The essence of corporate control includes the hiring and firing of key managers. We examine changes in equity values when the Board of Directors appoints and dismisses top-level managers. The evidence suggests that management changes signal shifts in company policy and raise shareholder wealth, internal promotions confirm the soundness of investment by large companies in firm-specific human capital while external appointments do not, promotions occur more often than external appointments but decline in importance as firm size decreases, and dismissal is not a favored means to handle managerial underperformance but is associated with stock price increases when used.
- DOI
- 10.1016/0304-405x(87)90065-1
- Volume
- 18
- Issue
- 1
- Pages
- 147-160
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref