Robust Models of CEO Turnover: New Evidence on Relative Performance Evaluation

Review of Corporate Finance Studies, Forthcoming

46 Pages Posted: 12 Jul 2015 Last revised: 12 Sep 2017

See all articles by C. Edward Fee

C. Edward Fee

Tulane University - A.B. Freeman School of Business

Charles J. Hadlock

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management

Jing Huang

University of South Carolina

Joshua R. Pierce

University of Alabama Culverhouse College of Commerce

Date Written: September 11, 2017

Abstract

We examine the robustness of empirical models and findings concerning CEO turnover. We show that the sensitivity of turnover to abnormal firm performance is an extremely robust result. In contrast, evidence indicating a relation between turnover and industry performance is both weak and fragile. We show that small changes in turnover modeling choices can affect inferences in a large way. Our evidence casts substantial doubt on the hypothesis that there is a large industry performance component to turnover decisions. We use our findings to offer some general prescriptions for checking robustness results in CEO turnover research.

Keywords: CEO turnover, performance measurement, relative performance evaluation, industry performance

JEL Classification: G30, G31, G32

Suggested Citation

Fee, C. Edward and Hadlock, Charles J. and Huang, Jing and Pierce, Joshua R., Robust Models of CEO Turnover: New Evidence on Relative Performance Evaluation (September 11, 2017). Review of Corporate Finance Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2616738 or http://dx.doi.org/10.2139/ssrn.2616738

C. Edward Fee

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Charles J. Hadlock (Contact Author)

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management ( email )

315 Eppley Center
East Lansing, MI 48824-1121
United States
517-353-9330 (Phone)
517-432-1080 (Fax)

Jing Huang

University of South Carolina ( email )

Francis M. Hipp Building
1705 College Street
Columbia, SC South Carolina 29208
United States
803-556-9674 (Phone)

Joshua R. Pierce

University of Alabama Culverhouse College of Commerce ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

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