Empirical Research on CEO Turnover and Firm-Performance: A Discussion
Posted: 9 Dec 2003
Engel/Hayes/Wang and Farrell/Whidbee provide new evidence on how firms weight alternative performance measures in making CEO retention and replacement decisions. While their results are statistically significant, firm performance continues to explain very little of the variation in CEO turnover. I argue we have probably reached a point of diminishing returns in estimating logit models that focus on the relation between CEO turnover and firm performance measures. We will have to consider other less-explored issues to increase our understanding of CEO turnovers and replacements. Analyzing age-related issues is one example.
Keywords: CEO turnover, agency problems, incentives
JEL Classification: G30, G34, J33, J44, M41, M51
Suggested Citation: Suggested Citation