Corporate Performance, Corporate Governance and Top Executive Turnover in Finland

This paper empirically investigates how corporate governance forces and firm performance affect top executive turnover in Finnish listed companies. I document an increase in CEO, top management, and board turnover in response to poor stock price performance and operating losses. The sensitivity of t...

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Bibliographic Details
Published in:European financial management : the journal of the European Financial Management Association 2006-03, Vol.12 (2), p.221-248
Main Author: Maury, Benjamin
Format: Article
Language:English
Subjects:
board design
board turnover
Business management
Chief executive officers
Corporate governance
Economic performance
Empirical tests
Employee turnover
Enterprises
Executives
Finland
G32
G38
Labour turnover
management turnover
ownership structure
Senior management
Stock prices
Studies
two-tier board
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Summary:This paper empirically investigates how corporate governance forces and firm performance affect top executive turnover in Finnish listed companies. I document an increase in CEO, top management, and board turnover in response to poor stock price performance and operating losses. The sensitivity of the relation between stock price performance and CEO turnover is significantly higher in firms with a two‐tier board structure (when the CEO is not the chairman), but significantly lower when the CEO or a board member is the controlling shareholder. These results suggest that both the ownership structure and the board design have implications for the disciplining of managers.
ISSN:1354-7798
1468-036X
DOI:10.1111/j.1354-7798.2006.00317.x