Effects of Executive Migrations and Subsequent Restructuring Events

54 Pages Posted: 16 Jan 2005 Last revised: 14 Nov 2008

See all articles by Seunghan Nam

Seunghan Nam

Rensselaer Polytechnic Institute (RPI) - Accounting, Finance and Economics

Joshua Ronen

New York University (NYU) - Department of Accounting

Date Written: November 5, 2008

Abstract

We consider whether the market conditions its reactions to an executive's move from an Origin Company to a Destination Company on the executive's past performance and any other information impounded in the market reaction to the executive's emigration from the Origin Company. We also examine whether the market perceives a benefit in the hiring of an executive with an industry-specific background. We find that, with regard to migration events, the performance of the Origin Company-accounting and stock-before the executive's migration and the market reaction to the emigration are positively associated with the market reaction to the immigration event only when the Origin Company and the Destination Company are members of the same industry. With respect to an Origin Company's contiguously subsequent write-off and restructuring events, we conjecture that subsequent restructuring events signal hitherto unrecognized shortcomings of the emigrating executive. We find that, ceteris paribus, the market reaction to the Destination Company's stock at the time of the Origin Company's announcement of a post-immigration restructuring is significantly negative, but again only when the Origin Company and the Destination Company are members of the same industry. Furthermore, contrary to previous studies, we find that Origin Companies' and Destination Companies' stocks exhibit negative reactions to their own restructuring events.

Keywords: Management migration, Write-off, Restructuring

JEL Classification: J24, J63, G14, M41

Suggested Citation

Nam, Seunghan and Ronen, Joshua, Effects of Executive Migrations and Subsequent Restructuring Events (November 5, 2008). Available at SSRN: https://ssrn.com/abstract=649141 or http://dx.doi.org/10.2139/ssrn.649141

Seunghan Nam (Contact Author)

Rensselaer Polytechnic Institute (RPI) - Accounting, Finance and Economics ( email )

United States

Joshua Ronen

New York University (NYU) - Department of Accounting ( email )

40 West 4th Street, Suite 400
Suite 10-180
New York, NY 10012-1118
United States
212-998-4144 (Phone)
212-995-4599 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~jronen/

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