Personal Costs of Executive Turnovers

50 Pages Posted: 3 Mar 2017

See all articles by Kasper Meisner Nielsen

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance

Date Written: October 2015


This study examines how costly forced turnover is for the CEO using income data from the official records at the Danish Tax Authorities. We find that ousted CEOs’ personal income is 40% lower in the five years following forced turnovers. The decline is driven by labor market outcomes: Labor and entrepreneurial incomes decline, while financial incomes increase. Consistent with the executive labor market being the main channel for the lower income, we find larger declines in income for executives with poor idiosyncratic firm performance during their tenures. Overall, the findings suggest that forced executive turnover is an important internal corporate governance mechanism.

Keywords: Executive turnover, Executive compensation, Corporate governance, Agency costs

JEL Classification: G3, G30

Suggested Citation

Nielsen, Kasper Meisner, Personal Costs of Executive Turnovers (October 2015). Available at SSRN: or

Kasper Meisner Nielsen (Contact Author)

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000

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