Journal of Financial and Quantitative Analysis Vol. 55 No. 2 2020
Are Generalists Beneficial to Corporate Shareholders? Evidence from Exogenous Executive Turnovers
Abstract
This study finds a positive, economically meaningful impact of generalist chief executive officers (CEOs) on shareholder value using 164 sudden deaths and 345 non-sudden exogenous turnovers. The higher a departing CEO’s general ability index (GAI), independently and relative to her successor, the lower is the abnormal stock return to turnover announcements. Returns reflect post-turnover changes in operating performance. Further, CEOs’ and successors’ GAIs are significantly positively related, but only for non-sudden turnovers. Consistently, for sudden deaths, we find positive stock returns to appointments of generalist successors. The results provide a market-based explanation for the generalist pay premium.
- DOI
- 10.1017/s0022109018001400
- Volume
- 55
- Issue
- 2
- Pages
- 581-619
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref