Why Are CEOs Rarely Fired? Evidence from Structural Estimation

• 成果类型: Article
• 署名作者: Taylor, Lucian A.
• 署名单位: University of Pennsylvania
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2010.01610.x
• 发表日期: 2010
• 页码: 2051-2087
• 关键词: turnover; governance; pay; performance; SEPARATION; succession; OWNERSHIP; DIRECTORS

摘要

I evaluate the forced CEO turnover rate and quantify effects on shareholder value by estimating a dynamic model. The model features learning about CEO ability and costly turnover. To fit the observed forced turnover rate, the model needs the average board of directors to behave as if replacing the CEO costs shareholders at least $200 million. This cost mainly reflects CEO entrenchment rather than a real cost to shareholders. The model predicts that shareholder value would rise 3% if we eliminated this perceived turnover cost, all else equal. The model also helps explain the relation between CEO firings, tenure, and profitability.