Abstract
This paper examines the relationship between performance and CEO turnover in Spanish listed and large unlisted firms for the period 1998-2004. Following the Bover and Arellano (1997) approach, we carry out a dynamic binary choice model where the decision to replace a CEO includes lags of the dependent variable, previous performance, and previous changes in the chairman position as endogenous determinants of this governance intervention. We find that for both listed and unlisted firms, previous performance changes are negatively correlated with CEO turnover. Furthermore, listed and unlisted firms follow different paths when taking decisions linked to CEO replacements: whereas unlisted firms are less likely to replace a recently hired CEO, listed companies appear more impatient. Finally, ownership concentration and the presence of banks are also important determinants of CEO turnover decisions, but only for listed firms. Our results give support to the growing call by academics who highlight the importance of controlling endogeneity to correctly examine the determinants of governance interventions.
| Translated title of the contribution | Rotación de CEOs determinada de forma endógena: : La lucha por la continuidad en empresas cotizadas y no cotizadas |
|---|---|
| Original language | English |
| Journal | Academy of Management Proceedings |
| Issue number | 1 |
| DOIs | |
| State | Published - 2009 |
Keywords
- Corporate governance
- CEO turnover
- Ownership structure
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