Do Delaware CEOs Get Fired?
43 Pages Posted: 11 Dec 2008 Last revised: 23 Jan 2016
Date Written: January 20, 2016
Critics have charged that state competition in corporate law, which Delaware dominates, leads to a “race to the bottom” making management unaccountable. One metric of management accountability is forced CEO turnover, which we use to test the race-to-the-bottom hypothesis. We find that Delaware CEOs are more likely to be forced out relative to firms incorporated in other jurisdictions. After controlling for differences in firm characteristics, we find that firms incorporated in Delaware are still more likely to terminate CEOs, but that termination decision is less sensitive to poor performance.
Keywords: Corporate governance, charter competition, CEO turnover
JEL Classification: G30, G34, K22
Suggested Citation: Suggested Citation