CEO Turnover and Director Reputation

83 Pages Posted: 8 Feb 2021 Last revised: 2 May 2022

See all articles by Felix von Meyerinck

Felix von Meyerinck

Tilburg University - Tilburg University School of Economics and Management

Jonas Romer

University of St. Gallen - School of Finance

Markus Schmid

University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - School of Finance; Swiss Finance Institute

Date Written: March 30, 2022

Abstract

This paper analyzes the reputational effects of forced CEO turnovers on outside directors. Directors interlocked to a forced CEO turnover experience large and persistent increases in withheld votes at subsequent re-elections relative to non-turnover-interlocked directors. Reputational losses are larger for turnovers with a higher potential for disrupting a firm's management, for directors favorably inclined to the CEO, and for directors with a committee-based responsibility for monitoring the CEO. Our results imply that the average forced CEO turnover signals a governance failure at the board level, and that shareholders rely on salient actions to update their beliefs about directors' hidden qualities.

Keywords: CEO turnover, director elections, director reputation, CEO succession, shareholder voting

JEL Classification: G32, G34

Suggested Citation

von Meyerinck, Felix and Romer, Jonas and Schmid, Markus, CEO Turnover and Director Reputation (March 30, 2022). University of St.Gallen, School of Finance Research Paper No. 2021/06 , Available at SSRN: https://ssrn.com/abstract=3774434 or http://dx.doi.org/10.2139/ssrn.3774434

Felix Von Meyerinck

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Jonas Romer

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Markus Schmid (Contact Author)

University of St. Gallen - Swiss Institute of Banking and Finance ( email )

Unterer Graben 21
St. Gallen, 9000
Switzerland

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Swiss Finance Institute

c/o University of St. Gallen
Dufourstrassse 50
St. Gallen, SG 9000
Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
214
Abstract Views
1,555
rank
196,778
PlumX Metrics