Stock Prices and Top Management Changes

Posted: 6 Sep 2006

See all articles by Jerold B. Warner

Jerold B. Warner

University of Rochester – Simon Business School

Ross L. Watts

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Karen H. Wruck

Ohio State University - Fisher College of Business, Department of Finance

Abstract

This paper studies the association between a firm's stock returns and subsequent top management changes. Consistent with internal monitoring of management, there is an inverse relation between the probability of a management change and a firm's share performance. This relation can result from monitoring by the board, other top managers, or blockholders. However, unless share performance is extremely good or bad, logit models have no predictive ability. No average stock reaction is detected at announcement of a top management change.

Keywords: Management changes, stock price performance, governance

Suggested Citation

Warner, Jerold B. and Watts, Ross L. and Wruck, Karen H., Stock Prices and Top Management Changes. Journal of Financial Economics, Vol. 20, 1988. Available at SSRN: https://ssrn.com/abstract=928680

Jerold B. Warner (Contact Author)

University of Rochester – Simon Business School ( email )

Carol Simon Hall 3-160H
Rochester, NY 14627
United States
585-275-2678 (Phone)
585-442-6323 (Fax)

Ross L. Watts

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-325
Cambridge, MA 02142
United States

Karen H. Wruck

Ohio State University - Fisher College of Business, Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-4330 (Phone)
614-292-2418 (Fax)

HOME PAGE: http://https://fisher.osu.edu/people/wruck.1

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