Timely vs. Delayed CEO Turnover

Information Systematic Frontier 2017, 19(3), 469-479.

26 Pages Posted: 14 Sep 2017

See all articles by Kuntara Pukthuanthong

Kuntara Pukthuanthong

University of Missouri, Columbia

Saif Ullah

Concordia University

Thomas John Walker

Concordia University, Quebec - Department of Finance

Xuan Wu

Concordia University, Quebec, John Molson School of Business, Students

Date Written: September 12, 2017

Abstract

This paper investigates changes in company performance following timely versus delayed CEO resignations due to financial wrongdoings. A timely resignation is proactively pushed by the company, and a delayed resignation is driven by investigations initiated by the SEC or other regulatory authorities. Our results show significant negative abnormal returns following the announcement of CEO resignations. In addition, compared with timely resignations, delayed resignations experience a larger and longer lasting negative stock market reaction. This suggests that CEO resignations due to financial wrongdoings are not perceived as good news by investors, and the delayed resignations could make investors lose more confidence, possibly because of worries about the ineffective corporate governance and supervision mechanism. We have found a significant negative relationship between CEO-chairman duality and the timeliness of CEO resignations. Our results have important implications for investors and policy makers.

Keywords: Duality; Financial Wrongdoing; CEO Turnover; CEO Resignations

JEL Classification: G34; G14

Suggested Citation

Pukthuanthong, Kuntara and Ullah, Saif and Walker, Thomas John and Wu, Xuan, Timely vs. Delayed CEO Turnover (September 12, 2017). Information Systematic Frontier 2017, 19(3), 469-479., Available at SSRN: https://ssrn.com/abstract=3036247

Kuntara Pukthuanthong (Contact Author)

University of Missouri, Columbia ( email )

Robert J. Trulaske, Sr. College of Business
403 Cornell Hall
Columbia, MO 65211
United States
6198076124 (Phone)

HOME PAGE: https://www.kuntara.net/

Saif Ullah

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1MB
Canada

Thomas John Walker

Concordia University, Quebec - Department of Finance ( email )

Montreal, Quebec H3G 1M8
Canada

Xuan Wu

Concordia University, Quebec, John Molson School of Business, Students ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada

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