Equity issuance, CEO turnover and corporate governance

Patrick McColgan, D. Hillier, S. Linn

    Research output: Contribution to journalArticle

    21 Citations (Scopus)

    Abstract

    There is substantial evidence on the effect of external market discipline on chief executive turnover decisions in poorly performing companies. In this study we present evidence on the role of institutional monitoring in these decisions through the equity issuance process. We find that firms which undertake equity offerings are associated with an increased rate of forced CEO turnover that is focused on the managers of poorly performing companies. At the same time, equity offerings increase the likelihood of a new CEO being appointed from outside the current management team. We also provide evidence that independent boards are more likely to forcibly remove CEOs from their position, although this is not conditional on poor performance.

    Original languageEnglish
    Pages (from-to)515-538
    Number of pages23
    JournalEuropean Financial Management
    Volume11
    Issue number4
    DOIs
    Publication statusPublished - Sep 2005

    Keywords

    • CEO turnover
    • equity issuance
    • board structure
    • TOP MANAGEMENT TURNOVER
    • MANAGERIAL TURNOVER
    • OWNERSHIP STRUCTURE
    • EXECUTIVE TURNOVER
    • FIRM PERFORMANCE
    • DIRECTORS
    • TAKEOVERS
    • SUCCESSION
    • SELECTION
    • FAILURE

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