Shareholder Wealth Effects of CEO Departures: Evidence from the UK

University of Bristol Working Paper No. 00/497

47 Pages Posted: 4 May 2001

See all articles by Elisabeth Dedman

Elisabeth Dedman

Surrey Business School

Steve W. J. Lin

Florida International University (FIU) - School of Accounting

Date Written: October 2000

Abstract

This paper examines share price behaviour surrounding announcements of CEO departures from UK firms listed on the All Share Index between 1990 and 1995. We find that many firms choose not to announce CEO departures, and that these firms have poorer performance records, and higher chances of future failure, than those firms who officially announce CEO turnover to the London Stock Exchange. The market reacts negatively to announcements of top executive departures, especially when the CEO is dismissed or leaves to take up another job. Share price reactions to the disclosure of top executive departure are significantly affected by the financial risk of the firm and whether the board announces a replacement CEO.

Keywords: Corporate governance, managerial departure, board structure

JEL Classification: G0, G3

Suggested Citation

Dedman, Elisabeth and Lin, Steve W. J., Shareholder Wealth Effects of CEO Departures: Evidence from the UK (October 2000). University of Bristol Working Paper No. 00/497. Available at SSRN: https://ssrn.com/abstract=265368 or http://dx.doi.org/10.2139/ssrn.265368

Elisabeth Dedman (Contact Author)

Surrey Business School ( email )

University of Surrey
Stag Hill Campus
Guildford, GU2 7XH
United Kingdom

Steve W. J. Lin

Florida International University (FIU) - School of Accounting ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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