Managerial succession and firm performance

Mark R. Huson, Paul H. Malatesta, Robert Parrino

    Research output: Contribution to journalArticle

    247 Citations (Scopus)

    Abstract

    We examine CEO turnover and firm financial performance. Accounting measures of performance relative to other firms deteriorate prior to CEO turnover and improve thereafter. The degree of improvement is positively related to the level of institutional shareholdings, the presence of an outsider-dominated board, and the appointment of an outsider (rather than an insider) CEO. Turnover announcements are associated with significantly positive average abnormal stock returns, which are in turn significantly positively related to subsequent changes in accounting measures of performance. This suggests that investors view turnover announcements as good news presaging performance improvements.

    Original languageEnglish (US)
    Pages (from-to)237-275
    Number of pages39
    JournalJournal of Financial Economics
    Volume74
    Issue number2
    DOIs
    StatePublished - Nov 1 2004

    Fingerprint

    CEO turnover
    Outsider
    Turnover
    Firm performance
    Announcement
    Stock returns
    Financial performance
    Performance improvement
    Chief executive officer
    Insider
    News
    Investors
    Shareholding
    Relative performance

    Keywords

    • CEO succession
    • CEO turnover
    • Corporate governance
    • Firm performance

    ASJC Scopus subject areas

    • Accounting
    • Finance
    • Economics and Econometrics
    • Strategy and Management

    Cite this

    Managerial succession and firm performance. / Huson, Mark R.; Malatesta, Paul H.; Parrino, Robert.

    In: Journal of Financial Economics, Vol. 74, No. 2, 01.11.2004, p. 237-275.

    Research output: Contribution to journalArticle

    Huson, MR, Malatesta, PH & Parrino, R 2004, 'Managerial succession and firm performance' Journal of Financial Economics, vol. 74, no. 2, pp. 237-275. https://doi.org/10.1016/j.jfineco.2003.08.002
    Huson, Mark R. ; Malatesta, Paul H. ; Parrino, Robert. / Managerial succession and firm performance. In: Journal of Financial Economics. 2004 ; Vol. 74, No. 2. pp. 237-275.
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