Board Structure, CEO Turnover, and Bank Performance

58 Pages Posted: 18 Mar 2011 Last revised: 15 Aug 2011

Zhongdong Chen

Carson-Newman University

Date Written: April 1, 2011

Abstract

This study systematically investigates the impact of board structure on forced bank CEO turnovers. Using a sample of 149 bank CEO turnovers, I show that forced CEO turnover is motivated more by high risk level than by poor performance, suggesting that bank directors place “safety and soundness” before profitability. This study is the first to document that occupational background of independent directors can have a significant impact on forced bank CEO turnovers. In contrast with previous studies, I do not find any significant correlation between board independence ratio and the probability of forced bank CEO turnover, or changes in post-turnover performance.

Keywords: corporate governance, board structure, banking industry, CEO turnover, successor origin

JEL Classification: G21, G34, G38

Suggested Citation

Chen, Zhongdong, Board Structure, CEO Turnover, and Bank Performance (April 1, 2011). Available at SSRN: https://ssrn.com/abstract=1787331 or http://dx.doi.org/10.2139/ssrn.1787331

Zhongdong Chen (Contact Author)

Carson-Newman University ( email )

Carson-Newman University
Jefferson City, TN 37760
United States

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