Governance and CEO Turnover: Do Something or Do the Right Thing?

• 成果类型: Article
• 署名作者: Fisman, Raymond J.; Khurana, Rakesh; Rhodes-Kropf, Matthew; Yim, Soojin
• 署名单位: Columbia University; Harvard University; Emory University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2013.1759
• 发表日期: 2014
• 页码: 319-337
• 关键词: Corporate finance; management; organizational studies; decision making; ceo turnover; governance; entrenchment; entrenched CEOs

摘要

We study how corporate governance affects firm value through the decision of whether to fire or retain the chief executive officer (CEO). We present a model in which weak governance-which prevents shareholders from controlling the board-protects inferior CEOs from dismissal, while at the same time insulates the board from pressures by biased or uninformed shareholders. Whether stronger governance improves retain/replace decisions depends on which of these effects dominates. We use our theoretical framework to assess the effect of governance on the quality of firing and hiring decisions using data on the CEO dismissals of large U.S. corporations during 1994-2007. Our findings are most consistent with a beneficent effect of weak governance on CEO dismissal decisions, suggesting that insulation from shareholder pressure may allow for better long-term decision making.