CEO Turnover in LBOs: The Role of Boards

44 Pages Posted: 25 May 2013 Last revised: 21 Dec 2015

Francesca Cornelli

London Business School; Centre for Economic Policy Research (CEPR)

Oğuzhan Karakaş

Boston College - Department of Finance

Date Written: December 2015


We examine the CEO turnover in LBOs backed by private equity funds. When a company is taken private, we find that the CEO turnover decreases and is less contingent on performance. We also find that a higher involvement of the LBO sponsors, who replace the outside directors on the board after transition to private, reduces the CEO turnover and its sensitivity to performance, but improves the operating performance. These findings suggest that more inside information and effective monitoring allow private equity funds to assess CEOs' performance over a longer horizon relative to their publicly-traded counterparts.

Keywords: CEO Turnover, Private Equity, Leveraged Buyouts, Boards of Directors, Corporate Governance

JEL Classification: G34, G30, G24

Suggested Citation

Cornelli, Francesca and Karakaş, Oğuzhan, CEO Turnover in LBOs: The Role of Boards (December 2015). Available at SSRN: or

Francesca Cornelli

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
+44 20 7262 5050 x3225 (Phone)
+44 20 7724 3317 (Fax)


Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Oğuzhan Karakaş (Contact Author)

Boston College - Department of Finance ( email )

Carroll School of Management
Fulton Hall 334, 140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States
+1-617-552-1175 (Phone)
+1-617-552-0431 (Fax)


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