The Cadbury Committee, Corporate Performance, and Top Management Turnover

Posted: 22 Nov 2003

See all articles by Jay Dahya

Jay Dahya

Zicklin School of Business, Baruch College - The City University of New York

Nickolaos G. Travlos

University of Surrey; ALBA Graduate Business School

John J. McConnell

Purdue University

Abstract

In 1992, the Cadbury Committee issued the code of Best Practice which recommends that boards of U.K. corporations include at least three outside directors and that the positions of chairman and CEO be held by different individuals. The underlying presumption was that these recommendations would lead to improved board oversight. We empirically analyze the relationship between CEO turnover and corporate performance. CEO turnover increased following issuance of the code; the negative relationship between CEO turnover and performance became stronger following the code's issuance; and the increase in sensitivity of turnover to performance was concentrated among firms that adopted the code.

Suggested Citation

Dahya, Jay and Travlos, Nickolaos G. and McConnell, John J., The Cadbury Committee, Corporate Performance, and Top Management Turnover. Journal of Finance, Vol. 57, pp. 461-483, 2002. Available at SSRN: https://ssrn.com/abstract=309167

Jay Dahya (Contact Author)

Zicklin School of Business, Baruch College - The City University of New York ( email )

55 Lexington Ave., Box B13-260
New York, NY 10010
United States

Nickolaos G. Travlos

University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

ALBA Graduate Business School ( email )

Athinas Ave. & 2A Areos Str.
Vouliagmeni 166 71, Athens
Greece

HOME PAGE: http://www.alba.edu.gr

John J. McConnell

Purdue University ( email )

MGMT, KRAN
403 West State St.
West Lafayette, IN 47907-2056
United States
765-494-5910 (Phone)
765-494-7863 (Fax)

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