Review of Financial Studies Vol. 31 No. 11 2018

Product Market Competition Shocks, Firm Performance, and Forced CEO Turnover

Sudipto Dasgupta¹; Xi Li²; Albert Y. Wang³

¹ Chinese University of Hong Kong, Lancaster University, and CEPR · ² University of Arkansas · ³ Auburn University

Abstract

We examine the effect of competition shocks induced by major industry-level tariff cuts on forced CEO turnover. Both the likelihood of forced CEO turnover and its sensitivity to performance increase. These effects are stronger for firms exposed to greater predation risk and with products more similar to those of other firms. CEOs are more likely to be forced out in weak governance firms; however, in good governance firms, CEOs are offered higher incentive pay. New outside CEOs receive higher incentive pay and come from firms with lower cost structures and higher asset sales. Performance and productivity improve after forced turnover. Received November 27, 2014; editorial decision July 18, 2017 by Editor David Denis.

DOI

10.1093/rfs/hhx129

Volume

31

Issue

11

Pages

4187-4231

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓