The Impact of Tenure on the Firm Performance-CEO-Turnover Relation
Kathleen A. Farrell
University of Nebraska-Lincoln
University of Nebraska at Lincoln - Department of Economics
The Journal of Financial Research
We analyze the effect of CEO tenure on the relation between firm performance and forced turnover. We find that the performance-forced turnover relation is conditional on CEO tenure. Our results suggest a constant negative relation between firm performance and forced turnover throughout an inside CEO's tenure. Founders are entrenched early in their careers but held accountable for firm performance later in their careers. We find evidence that outside hires experience a probationary period, followed by a period of apparent entrenchment during their intermediate years that weakens later in their tenure.
JEL Classification: G32, J44Accepted Paper Series
Date posted: May 1, 2000
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