Does firing a CEO pay off?

Alexandridis, G., Doukas, J. A. and Mavis, C. P. (2019) Does firing a CEO pay off? Financial Management, 48 (1). pp. 3-43. ISSN 1755-053X doi: 10.1111/fima.12228

Abstract/Summary

We examine whether involuntary CEO replacements pay off by improving firm prospects. We find CEO successors’ acquisition investments to be associated with significantly higher shareholder gains relative to their predecessors and the average CEO. This improvement in post-turnover acquisition performance appears to be a function of board independence, hedge fund ownership, and the new CEO’s relative experience. CEO successors also create sizeable shareholder value by reversing prior investments through asset disposals and discontinuing operations and by employing more efficient investment strategies. Our evidence suggests that firing a CEO pays off.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/77085
Identification Number/DOI	10.1111/fima.12228
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Wiley
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