Journal of Financial and Quantitative Analysis Vol. 56 No. 4 2021
How Does Forced-CEO-Turnover Experience Affect Directors?
Abstract
We study changes in independent director behavior and labor-market outcomes after the experience of a forced Chief Executive Officer (CEO) turnover. We find that independent directors are more willing to fire CEOs of underperforming firms, hire outside CEOs after a firing, and encourage better board-meeting attendance by fellow directors. We also find that the shareholders of poorly performing firms react positively when experienced directors join the board. It does come with a small cost for directors, in terms of additional directorships, although the cost is not as great as that for directors who do not fire the CEO of a poorly performing firm.
- DOI
- 10.1017/s0022109020000307
- Volume
- 56
- Issue
- 4
- Pages
- 1163-1191
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref