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Does firing a CEO pay off?

Alexandridis, G, Doukas, JA and Mavis, CP (2016) Does firing a CEO pay off? [Working Paper]

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Abstract

An involuntary CEO change is a significant event in a firm’s lifetime. This study examines whether forced CEO replacements improve firm performance through new acquisitions and auxiliary corporate strategies. We find CEO successors’ acquisitions to be associated with significantly higher shareholder gains relative to their predecessors and the average CEO. The post-turnover acquisition performance turnaround is more pronounced in the presence of greater board independence, hedge fund investors, and CEO experience. CEO successors also create sizeable shareholder value by reversing prior investments through asset disposals and discontinuing operations. Our evidence suggests that CEOs should be dismissed when they underperform.

Item Type: Working Paper
Subjects : Surrey Business School
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
AuthorsEmailORCID
Alexandridis, GUNSPECIFIEDUNSPECIFIED
Doukas, JAUNSPECIFIEDUNSPECIFIED
Mavis, CPUNSPECIFIEDUNSPECIFIED
Date : 2016
Uncontrolled Keywords : CEO turnovers; Acquisition performance; Divestitures; Corporate governance; CEO experience; Hedge funds
Additional Information : Full text may be available at a later date.
Depositing User : Symplectic Elements
Date Deposited : 29 Jul 2016 11:22
Last Modified : 29 Jul 2016 11:22
URI: http://epubs.surrey.ac.uk/id/eprint/811267

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